A bond that trades in the market at its par value (face value). In other words, parity implies that the bond’s coupon rate that is equal to the interest rate prevailing in the market. For example, a bond with a par value of $1,000 (that is, the value that was assigned to the bond by its issuer at the time of issuance), is currently trading at $1,000 in the market, is said to be a par bond- or a bond trading at par.

In essence, a bond is redeemable at par. And if it is currently trading at that same value, the bond is at par at that given moment in time. In which case, the bond provides neither a premium nor a discount to its par value. The yield to maturity (YTM) of a par bond is known as a par yield.