What is a credit spread?

This refers to the difference between the capital trust security’s interest rate or yield and the yield offered by a similar Government of Canada Bond. Credit spreads are expressed in Basis Points where one Basis Point equals 0.10%. So, for example, if the credit spread is stated as 92.5 Basis Points (bps), this is the difference between the indicated yield of the securities and the yield earned from a similar Government of Canada Bond. Typically, the prospectus will provide the benchmark Government of Canada Bond yield.

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