which LT debt to use in Bond +Risk premium

[rexthedog]

In the textbooks there is an example on IBM.
30 year T bond YTM: 3.7%
IBM 2042 YTM: 4.43%
Risk Premium 2.75%
Answer is 4.43+2.75 = 7.18
Just curious why we are using IBM debt and not government debt which surely would have a better rating.
Thanks

 

[Harrogath]

If you evaluatig a corporation bond similar to IBM, I would use IBM’s bond yield, not the treasury’s. This looks like matrix pricing, or not?