z vs nominal spread and debt repayment on income statement

maybe i am just really jammed

can someone explain to me why all else equal the difference between the nominal spread and the Z spread for a non treasury security will be larger when the yield curve is steep? Thanks

Another issue I got bugged is when you repaay debt with cash, I know on b/s how liability and asset decrease, does that impact CF or IS at all? if yes, how

when you repay debt with cash

cash decreases - so assets decrease

debt (liabilities decrease)

Decrease in Assets = Decrease in Liabilities

so no change in BS or IS.


Cash flow from financing increases – since debt repayment = CFF