Face Value

Face value — also called "par" — is the number printed on the bond contract itself: the original loan amount the issuer will return at the end of the bond's life. For most government and corporate bonds, this is $1,000 per bond, though the convention varies by country and instrument. It is the anchor around which everything else is calculated.

The coupon rate is always expressed as a percentage of face value, not of the bond's current market price. So a 5% coupon on a $1,000 face-value bond means $50 in annual interest — full stop. Even if the bond's market price rises to $1,100 or falls to $900, that $50 payment doesn't change, and the $1,000 repayment at maturity doesn't change either.

When a bond's market price equals its face value, traders say it is trading "at par." Above face value is a "premium"; below is a "discount." Newly issued bonds are typically sold close to par, but secondary-market prices drift as interest rates move. See how market quotes work for more on how price and par relate in practice.

A common confusion is treating face value as the bond's current worth. It isn't — face value is a contractual repayment amount, fixed at issuance. Market value is what someone will pay for the bond today, and those two numbers are rarely identical once a bond starts trading.