A credit spread is the extra yield a company pays to borrow compared with the US government for the same length of time. If a five-year Treasury yields 4 percent and a company’s five-year bond yields 5.5 percent, the spread is 1.5 percentage points, or 150 basis points (one basis point is 0.01 point). That gap is the market’s price for the chance the company won’t pay back, plus a bit for being harder to sell than a Treasury.

The yield curve plots the interest rates on US Treasury debt from the shortest maturities (a few weeks) out to 30 years. Normally it slopes upward: lenders want more to tie money up for longer. When short-term rates rise above long-term ones, the curve is “inverted”, and that has happened before every US recession since the late 1960s. That record made inversion the most quoted recession signal in finance. Then the curve stayed inverted for more than two years from 2022 to 2024 and, as of October 2026, no recession has followed.

Three agencies rate most of the world’s traded debt: S&P Global Ratings, Moody’s and Fitch. They use the same underlying ladder, written two different ways. S&P and Fitch use letters with plus and minus signs. Moody’s uses a different capitalisation and adds the numbers 1, 2 and 3. This page lines the scales up notch by notch and covers the short-term scales, the default symbols, outlooks and watches, historical default rates, and the vocabulary that goes with all of it.

A make-whole call provision is a clause in a bond indenture that allows the issuer to redeem the bond before maturity by paying the investor a price calculated to compensate for all future cash flows the investor would have received. The result is that early redemption costs the issuer significantly more than par — which is exactly the point. What It Is Standard callable bonds give issuers the right to redeem at predetermined call prices on predetermined dates.

A working reference for the vocabulary of financial markets — organized by domain, not alphabetically. Definitions are written for investors, analysts, financial journalists, and informed participants who need precision without the padding of a textbook. Market Structure Equity Ownership interest in a company, represented by shares of stock. Equity holders are residual claimants — they receive what remains after all creditors and obligations are satisfied. Common equity carries voting rights; preferred equity has priority in distributions but typically limited voting power.