Pull To Par

DEFINITION of 'Pull To Par'

The movement of a bond's price toward its face value as it approaches its maturity date. Premium bonds, which trade at a higher price than their face (par) value, will decrease in price as they approach maturity. Discount bonds, which trade at a lower price than their par value, will increase in price as they approach maturity.

BREAKING DOWN 'Pull To Par'

Pull to par reflects the fact that investors require a specific return on their bond investment, given the bond's characteristics and overall market conditions. If investors require a 5% return, a premium bond that is issued for $106 will move toward $100 as it approaches maturity, and a discount bond that is issued for $96 will move toward $100 as it approaches maturity. The par bond's value will hold steady at $100.

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