In terms of bond valuation, several factors are at work. For example, the issuing company’s credit rating can affect the market price of the bond. The higher the credit rating of the issuing entity, the lower the investment risk and the higher the value of the bond. Other factors that may affect the bond market price include the maturity date or the time remaining before expiration. Finally, perhaps the most important factor associated with the term spread is the coupon rate, especially compared to the general interest rate environment at the time. Given that fixed-rate coupon bonds will pay the same percentage of face value, the market price of the bond will change over time, depending on the current interest rate environment and the comparison or lower of the coupon with new and old bonds that may result in higher Coupon. For example, if interest rates fall and new bond coupons reflect a lower interest rate environment, bonds with high coupons issued in a high interest rate environment will become more valuable in the market. This is where the term spread is used as a means of comparison.