Below Par


DEFINITION of 'Below Par'

A term describing a bond whose price is below the face value or principal value, usually $1,000. As bond prices are quoted as a percentage of face value, a price below par would typically be anything less than 100.


A bond trading below par is the same as a bond trading at a discount. When a bond trades below par, its current yield is higher than its fixed coupon rate.

Bonds may trade below par when interest rates have risen since it was issued, its credit rating has declined, there are concerns about a default, or there is an excess supply. A bond's discount may narrow as it approaches maturity or its first call date, when investors will receive par value.

  1. Par

    Short for "par value," par can refer to bonds, preferred stock, ...
  2. Discount Bond

    A bond that is issued for less than its par (or face) value, ...
  3. Bond Rating

    A grade given to bonds that indicates their credit quality. Private ...
  4. Call Date

    The date on which a bond can be redeemed before maturity. If ...
  5. Face Value

    The nominal value or dollar value of a security stated by the ...
  6. Bond Discount

    The amount by which the market price of a bond is lower than ...
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