Pull To Par

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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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Par Value

    The face value of a bond. Par value for a share refers to the ...
  2. Discount Bond

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

    A debt investment in which an investor loans money to an entity ...
  4. Premium Bond

    1) A bond that is trading above its par value. A bond will trade ...
  5. Maturity Date

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  6. Below Par

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