luda002

The Z-spread is indeed a fixed number of points added to the spot rates and it is equal to the nominal spread if the yield curve is flat.
If the yield curve is upward sloping, for instance 1-year, 2-year, 5-year rates are 2%, 4% and 6% respectively and you compare it to a flat yield cuve of 6%,  then a bigger spread needs to be applied to the upward sloping curve in order to discount payments more heavily. Otherwise the prices of the bonds derived from the two spot rates will not be equal.