Trading a debt security like a bond/ note at a price lower than its par value (face value). Face value/ par value (also, principal) is the amount the debt security was issued for. It is the amount a debt security issuer promises to pay the buyer/ holder at maturity. For example, a $1000 par bond which is selling at $860 is said to be trading below par (hence it is known as a discount bond). The discount (bond discount) in this case is the difference between the par value and the below-par price (1000- 860= $ 140).

Fixed income securities, like notes and bonds, usually trade below par reflecting new market realities where interest rates are higher than the levels at which the securities were originally issued.

The opposite scenario is a debt security selling above par (at a premium).

Below par is also known as at-a-discount.