Available Credit
Definition:
The spread is the difference between Moody’s seasoned Aaa corporate bond yield and the current 10 year US Treasury yield; both yields are a monthly average of each business day of the month. Moody’s seasoned Aaa bond is an investment grade bond that acts as an index for all bonds given an Aaa rating by Moody’s. The 10 year Treasury yield is the current yield on a US Treasury Note with a 10 year maturity date.
Source:
St. Louis Federal Reserve.
Frequency:
Monthly; Last day of the month The Aaa/Treasury spread gives an indication of lender’s risk appetite, and an increase corresponds to a tightening of credit. Liquidity in credit markets is important for small and medium business, which do not have all of the means of accessing capital that large businesses do. For example, issuing corporate bonds may not be cost effective for a smaller firm, given the fixed costs that go along with a new issue. Small and Medium size businesses make up a significant portion of Florida economy, and without ease of access to capital they cannot expand as readily as might be necessary.
