Face Value
Corporate Credit Analysis glossary · Corporate Credit Analysis
Definition
The nominal or stated value of a debt instrument, distinct from market value. Recovery is conventionally expressed as a percentage of face value.
Face Value in plain English
Face value is the number printed on a bond — the fixed amount the borrower promises to repay when it comes due, no matter what anyone will actually pay for the bond today. It's like the 20-dollar number on a gift card: that's what it's officially worth, even if a reseller will only give you $15 cash for it right now (that $15 is the 'market value'). The two split apart because market value moves with interest rates and how risky the borrower looks. When people talk about 'recovery' after a default, they measure it against face value — recovering 40% means creditors got back 40 cents for every dollar originally promised.
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