Above Par (Bond)

Par Value of a Bond

Par value (also called nominal value) of a bond is usually 100 (or 1000 or some other nice round number), in general par value is the price at which the bond will be redeemed or repaid in the end.

Bonds Trading Above Par

A bond is said to be trading above par if its current market price is greater than the par value. For example if the bond’s market price would be 105, it would be trading above par. On the other hand, a bond whose market price would be 90 would be trading below par.

Bonds Trading at Premium vs. at Discount

A bond trading above par is also often said to be trading at a premium, while a bond below par is trading at a discount (it is always compared to the par value).