[Verse 1]
When you're trading bonds and need to compare
The yield spread shows how much extra you'll share
Above the benchmark rate that's safe and sound
Four different spreads help keep your feet on ground
G-spread takes the government bond as base
Subtracts it from your yield to find the space
Simple and clean, it's where beginners start
Comparing to treasury, that's the G-spread art
[Chorus]
G for government, Z for zero rates
I for index swaps, OAS adjusts for gates
Four credit spreads to help you understand
Which bond will give the best return in hand
G for government, Z for zero rates
I for index swaps, OAS compensates
Master these four and you'll navigate
The credit markets like a true candidate
[Verse 2]
Z-spread goes deeper than the G can show
Uses zero-coupon curve to help you know
The constant spread over each payment date
More accurate picture, worth the extra weight
Takes every cash flow, discounts with precision
Zero-coupon rates for better decision
When yield curves twist, Z-spread tells the truth
More complex but gives you cleaner proof
[Chorus]
G for government, Z for zero rates
I for index swaps, OAS adjusts for gates
Four credit spreads to help you understand
Which bond will give the best return in hand
G for government, Z for zero rates
I for index swaps, OAS compensates
Master these four and you'll navigate
The credit markets like a true candidate
[Verse 3]
I-spread switches to the swap curve base
Instead of treasuries, it finds its place
When swap rates better show the credit risk
I-spread gives you data that's more crisp
Libor-based swaps become your reference line
Especially useful when markets realign
Corporate bonds often trade this way
I-spread shows their premium day by day
[Bridge]
But what about options embedded inside
Callable bonds where issuers can hide
OAS strips away the option's cost
Shows true credit spread when options are tossed
Option-adjusted spread removes the noise
Of embedded calls that limit your choice
Clean credit view without option distortion
OAS gives you the clearest portion
[Chorus]
G for government, Z for zero rates
I for index swaps, OAS adjusts for gates
Four credit spreads to help you understand
Which bond will give the best return in hand
G for government, Z for zero rates
I for index swaps, OAS compensates
Master these four and you'll navigate
The credit markets like a true candidate
[Outro]
From simple G to complex OAS
Each spread reveals the market's ways
Choose your tool based on what you need
These four spreads help your analysis succeed