Spread (Interest rate differential)

A rate spread is a difference between two rates. It is common practice to compare the rate spreads on 10-year government bonds between different European countries and Germany, which has the best credit rating. This difference is expressed in basis points.

For example, the French government will borrow with a spread of 50 basis points (0.50%) above Germany: the French bond will be issued at 2.5% when the German bond is issued at 2%.