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A panda bond is a renminbi-denominated bond issued in mainland China by an entity incorporated outside mainland China. It allows foreign governments, financial institutions, and companies to raise funding in the onshore Chinese bond market and access domestic Chinese investors.
A pandemic bond is a type of catastrophe bond that transfers pandemic risk from governments or development institutions to investors. Investors receive high coupon payments, but may lose part or all of their principal if a qualifying disease outbreak meets predefined trigger conditions, with the released funds used to support emergency response in eligible countries.
Par value is the fixed nominal (face) value assigned to a bond or a share at issuance. It is mainly a legal and accounting reference used for payments, repayment at maturity, and financial reporting, while market value reflects what investors are willing to pay in real-time trading.
A parallel shift is a movement of the yield curve where interest rates across all maturities rise or fall by the same number of basis points. This means short-term, medium-term, and long-term bond yields move together without changing the overall shape or slope of the yield curve. Parallel shifts are used to assess how broad interest rate changes may affect bond prices and portfolio duration risk.
A perpetual bond is a bond with no maturity date. It usually pays interest for an indefinite period, while the issuer is not required to repay the principal on a fixed date. Perpetual bonds are often subordinated or hybrid instruments and may include call features, allowing the issuer to redeem them under specified conditions.
A PIK bond is a bond that pays interest in the form of additional debt rather than cash. This allows the issuer to defer cash interest payments, but it increases the outstanding principal amount and can make repayment more burdensome at maturity. PIK bonds are typically used in leveraged finance, mezzanine debt, and situations where the issuer wants to preserve cash flow.
A premium bond is a bond that trades above its face value, usually because its coupon is higher than current market rates. In the UK, “Premium Bonds” also refers to an NS&I savings product where returns come from a prize draw instead of guaranteed interest.
Probability of default is the estimated likelihood that a borrower or bond issuer will fail to meet its debt obligations within a defined time period, usually one year. It is used to assess credit risk, estimate expected loss, compare issuers, and determine whether a bond’s yield provides sufficient compensation for default risk.
Pull to par is the tendency of a bond’s market price to move closer to its par value as it approaches maturity. A bond bought below par usually rises toward par, while a bond bought above par usually declines toward par, assuming yields and credit conditions remain unchanged.