Credit spreads are a key indicator of the risk premium associated with a bond relative to a risk-free benchmark, such as government bonds. A wider credit spread indicates higher perceived risk, as investors demand more return to compensate for the possibility of default by the issuer. Conversely, a narrower credit spread suggests lower risk, as investors are willing to accept a smaller return for the same maturity. Credit spreads are widely used in bond markets and can reflect broader economic conditions, investor sentiment, and the health of the credit market.