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.

BREAKING DOWN '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. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Discount Bond

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

    1. A document used with government bonds, especially general ...
  4. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  5. Term Bond

    Bonds from the same issue that share the same maturity dates. ...
  6. Dollar Price

    The percentage of par, or face value, at which a bond is quoted. ...
Related Articles
  1. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  2. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  3. Investing

    5 Reasons to Invest in Municipal Bonds When the Fed Hikes Rates

    Discover five reasons why investing in municipal bonds after the Fed hikes interest rates, and not before, can be a great way to boost investment income.
  4. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  5. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
  6. Investing

    Top 6 Uses For Bonds

    We break down the stodgy stereotype to see what these investments can do for you.
  7. Investing

    Why Muni Bonds and Bond Funds are Perfect Together

    Municipal bonds and bond funds differ in several ways, which is partly why they complement each other well.
  8. Investing

    What is a Premium Bond?

    A premium bond is one that trades above its face or nominal amount.
RELATED FAQS
  1. Is risk parity a safe investment strategy?

    Learn how risk parity funds won't blow away the market, but will grow steadily over time by using the time-tested strategies ... Read Answer >>
  2. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
  3. What determines the price of a bond in the open market?

    Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >>
  4. What causes a bond's price to rise?

    Learn about factors that influence the price of a bond, such as interest rate changes, credit rating, yield and overall market ... Read Answer >>
Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Investing

    The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
  3. Stagflation

    A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, ...
  4. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  5. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center