G-Spread (Government Spread)
Yield spread of a bond over the interpolated government benchmark curve at matching maturity.
G-Spread measures the yield premium a bond offers above the risk-free government curve. Unlike a quoted spread (which uses a single benchmark tenor), G-Spread interpolates the zero curve at the bond's exact maturity. Formula: G-Spread = Bond YTM − Interpolated Govt Yield(maturity). Example: A 7-year corporate bond yields 5.50%. The interpolated UST zero rate at 7 years is 4.20%. G-Spread = 130 bp. G-Spread is simpler than Z-Spread (which discounts each cash flow separately) but gives a quick read on credit compensation. CFA L1 tests this as the most basic spread measure.
Formula