Below Par
Below par means a bond or security trades below its face or par value.
Fixed-income terms for par bonds, premium bonds, discount bonds, below-par prices, bond premiums, and bond discounts.
Par, premium, and discount bond pricing terms describe whether a bond’s quoted price is equal to, above, or below its face value.
Use this branch when the price level itself helps explain the bond’s coupon, yield, redemption risk, tax treatment, or accounting recognition.
| Term | Basic meaning |
|---|---|
| Par Bond | A bond priced at or near face value. |
| Premium Bond | A bond priced above par. |
| Discount Bond | A bond priced below par. |
| Below Par | A price below the bond’s face value. |
| Bond Premium | The amount by which price exceeds par. |
| Bond Discount | The amount by which price is below par. |
The par, premium, or discount label is a starting point, not a recommendation. Premium bonds can have high coupons but call risk. Discount bonds can have capital-appreciation potential but may reflect credit stress or low coupons. Par bonds can still carry meaningful duration, liquidity, tax, or issuer risk.
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Below par means a bond or security trades below its face or par value.
A bond discount is the amount a bond trades below par value, affecting yield, tax treatment, and issuer accounting.
A bond premium is the amount a bond trades above face value, usually when its coupon exceeds current market yields.
A discount bond trades below face value, usually because its coupon is below current market yields or credit risk has increased.
A par bond trades at or near face value, so its coupon rate is close to the market yield for comparable risk and maturity.
A premium bond trades above face value, usually because its coupon rate is higher than current yields on comparable bonds.