In connection with a default swap (or a credit default swap), it is the periodic payment that is made by the default swap buyer (protection buyer) to the default swap seller (protection seller) against an adverse credit event (covered by the swap). This spread is typically expressed/ quoted in basis points over a reference rate such as the swap rate or any generic market rate, and is paid quarterly or semiannually. In essence, the default swap spread reflects the credit risk of the underlying asset (i.e., reference entity, name).

This spread constitutes a regular stream of payments (known as the premium leg) made by the protection buyer to the protection seller. The proportion of these payments is calculated from a quoted default swap spread which is charged and paid on the face value of the underlying defaultable asset (for which protection is cherished). These payments are regularly made until a credit event takes place or until maturity (of the swap), whichever comes first.

It is also known as a default swap premium.