One way to measure risk with a fixed income security is to look at the gap between the yield to maturity offered by a corporate fixed income security and that offered by a government security with a similar maturity – gilts in the UK and Treasuries in the US.

For example if a corporate bond has a yield of 4.5% and the ten-year gilt yield is 2%, the spread is 2.5% (4.5%-2%) or 250 basis points (one basis point is 0.01%). The bigger this gap, or spread, the higher the market perception regarding the riskiness of the underlying security.