lc26mizzou

Reference rate = the rate for an "unsafe" investment (like a corporate bond)
Treasury rate = risk free rate

Reference rate = Treasury Rate + spread

It's really simple. You need to be paid a higher rate if the holder of your money is less safe. That is why there is a positive spread over treasuries. Don't be confused because it's a "swap" spread. The swap market is just a market where you can observe spreads. The spreads can be applied to other investments.