Yield spread premium (YSP) is a type of interest rate risk that arises when there is a difference between the yield on a bond and the yield on a floating-rate loan. This difference can be caused by a number of factors, including changes in interest rates, changes in credit quality, and changes in the supply and demand for bonds and loans.
YSP can be a significant source of risk for investors, as it can lead to losses if interest rates rise. There are a number of ways to avoid YSP, including: