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BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.

What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:

  • who holds an Australian Financial Services License

  • who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)

  • that is a body regulated by APRA other than a trustee of:
    (i) a superannuation fund;
    (ii) an approved deposit fund;
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme.
    within the meaning of the Superannuation Industry (Supervision) Act 1993

  • that is a body registered under the Financial Corporations Act 1974.

  • that is a trustee of:
    (i) a superannuation fund; or
    (ii) an approved deposit fund; or
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme
    within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.

  • that is a listed entity or a related body corporate of a listed entity

  • that is an exempt public authority

  • that is a body corporate, or an unincorporated body, that:
    (i) carries on a business of investment in financial products, interests in land or other investments; and
    (ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.

  • that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.


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Fixed income

Bond spread

The bond spread or yield spread, refers to the difference in the yield on two different bonds or two classes of bonds.


Investors use the spread as in indication of the relative pricing or valuation of a bond. If one bond yields 3% and another yields 1%, the yield spread is 2% -- which typically would be expressed as ‘200 basis points’.

The wider the spread between two bonds, or two classes of bonds, the greater the valuation differential. In particular, the bond or class of bond with the higher yield is considered riskier, with the higher yield being compensation to investors for this risk differential.

Yield and bond price

Bear in mind that the price of a bond moves inversely with its yield. So, when investors consider a bond to have become riskier and react by selling their holdings, the price of the bond declines, and thus its yield (the ratio of its coupon to this lower price) increases. If the pricing of other bonds remains unchanged in this scenario, the yield spread of this bond increases.

Typically, the yield on a bond issued by a company would be higher than the yield on a government bond of the same maturity, as governments tend to have better investment ratings (they are considered more likely to be able to service their debt) than private businesses. The riskier the issuing company is perceived to be, the wider its bond yield spread will be relative to government bonds.

Indicators of sentiment

Yields spreads can give market observers a quick snapshot of sentiment. For instance, at times when investors become risk-averse and favor safer bonds, yield spreads widen: this includes spreads between high yield debt and investment grade debt, or between emerging market debt and debt issued by developed countries.

Yield differentials between bonds of the same class but with different maturities are also helpful indicators of sentiment. Longer-dated debt usually is considered riskier than short-dated debt, owing to the maturity risk premium. So, long-term debt typically would have a positive yield spread relative to short-term debt.

But, at turning points in the market cycle, when a recession is priced in and fear of the immediate future prevails, investors shun shorter-term debt in favor of longer-term debt, thus pushing up short-term yields and dampening long-term yields. The yield spread would then shrink and may even turn negative (see Inverted yield curve).


See also

Credit spread
Credit market


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Important information: This website is prepared and issued in Australia by Robeco Hong Kong Limited (ARBN 156 512 659) (‘Robeco’) which is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order 03/1103. Robeco is regulated by the Securities and Futures Commission under the laws of Hong Kong and those laws may differ from Australian laws. The information on this web page is provided to you because Robeco reasonably believes that you are a "wholesale client" within the meaning of that term under section 761G(4) of the Corporations Act 2001 (Cth) ("Corporations Act") and not any other class of persons. This information is not an advertisement and is not intended to induce retail clients to acquire Robeco products. Retail clients who are interested in Robeco products should contact their financial adviser.