In relation to the LIBOR cessation plan, it is the credit and liquidity component of LIBOR relative to risk free rates (RFRs). The spread represents a certain number of basis points that were meant to be added to the fallback rates to replace a benchmark that ceased to publish. In other words, it is an adjustment to fallback rates that accounts for certain credit and liquidity factors in the market at a certain point in time (and for a certain tenor).

For example, it may represent the spread adjustment relating to U.S. Dollar LIBOR for a period of the designated maturity provided by a rate publisher or authorized distributors. For a benchmark such as USD LIBOR, and upon ceasing to publish, a fallback such as compounded SOFR plus the spread are used to replace the retired benchmark.