Legal Definitions - at par

The term "at par" describes a situation where a financial instrument, such as a stock or a bond, is issued or sold for exactly its stated or nominal value. This stated value is often referred to as its "face value" or "par value." When something is "at par," it means there is no premium (selling above face value) or discount (selling below face value) applied to its price.

• Example 1: Government Bond Issuance

  A national government decides to issue new bonds to fund public projects. Each bond has a stated face value of $1,000. When these bonds are first offered to investors, the government sells them for exactly $1,000 each. In this scenario, the bonds are being sold at par because their selling price matches their face value.

• Example 2: Preferred Stock Offering

  A corporation issues a new series of preferred stock, which has a designated par value of $50 per share. During the initial public offering, the company sells these shares to investors for precisely $50 per share. Here, the preferred stock is being offered at par, as its market price aligns perfectly with its nominal value.

• Example 3: Bond Redemption at Maturity

  An investor holds a corporate bond with a face value of $5,000 that is set to mature. On the maturity date, the issuing corporation repays the investor the exact amount of $5,000. This repayment is considered to be at par because the bondholder receives the full stated value of the bond back from the issuer.