Onder pari

Below par is a term used in securities and corporate law to denote that a share or bond is issued or traded at a price below its nominal value. This occurs, for example, when the prevailing market interest rate exceeds the bond’s coupon rate, leading investors to pay a discounted price in order to obtain a comparable yield.

The concept is material in the context of securities offerings, as the issuer may need to issue a greater number of securities to raise the targeted amount of capital. For investors, acquiring securities below par may result in a higher effective yield or a capital gain upon redemption at nominal value.

In practice, the term “below par” is commonly encountered in prospectuses and bond issuances where the issue price is set below 100 per cent of nominal value.