Parity Bond

AAA

DEFINITION of 'Parity Bond'

Two or more bond issues with equal rights to one another. In other words, a parity bond is an issued bond with equal rights to a claim as other bonds already issued. For example, unsecured bonds have equal rights in that coupons can be claimed without any one bond having priority over another. Therefore, unsecured bonds would be referred to as parity bonds.


A parity bond is also referred to as part passu bond.

INVESTOPEDIA EXPLAINS 'Parity Bond'

These types of fixed-income securities are commonly issued by municipalities as a way to gather finance capital. Parity bonds are similar to pari passu securities, which are securities or debts that have equal claims on a right. For example, common shares all have equal rights to claim a dividend without one share having priority over another.

RELATED TERMS
  1. Rights

    A security giving stockholders entitlement to purchase new shares ...
  2. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) ...
  3. Senior Security

    A security that ranks above another security in the event of ...
  4. Renounceable Right

    An offer issued by a corporation to shareholders to purchase ...
  5. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
Related Articles
  1. Savings Bonds For Income And Safety
    Bonds & Fixed Income

    Savings Bonds For Income And Safety

  2. Weighing The Tax Benefits Of Municipal ...
    Taxes

    Weighing The Tax Benefits Of Municipal ...

  3. Asset Allocation In A Bond Portfolio
    Bonds & Fixed Income

    Asset Allocation In A Bond Portfolio

  4. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center