Face/Par Value

The face value (also called par value) of a bond is the principal amount that the issuer promises to repay the bondholder on the maturity date. In India, government securities typically have a face value of ₹100, while corporate bonds may be issued at face values of ₹1,000 or ₹10,000. The face value is also the base on which coupon interest payments are calculated. When a bond trades in the secondary market at a price above its face value, it is said to be trading at a premium; when it trades below face value, it is at a discount. Face value is distinct from market price, which fluctuates with interest rate changes and credit conditions.