Banking & Finance Glossary—P
Banking & Finance Glossary—P

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Banking & Finance Glossary—P
  • Par
  • Pari passu
  • Lexis®PSL resources
  • Performance bond
  • Terminology
  • PIK
  • PIK facility
  • Lexis®PSL resources
  • Pledge
  • More...


The face value of a security at which it will be redeemed by the borrower at maturity

Pari passu

Literally means on an equal basis. The pari passu principle dictates that all unsecured creditors of an insolvent debtor rank equally and should be paid pari passu without discrimination between them. Some creditors (eg employees) are given certain preferential rights but these are special cases. The basic principle is that all unsecured creditors are equal in the event of their debtor's insolvency.

Lexis®PSL resources

Insolvency set-off—the position under the Insolvency (England and Wales) Rules 2016

Performance bond

A performance bond is a type of on demand guarantee. On demand guarantees are also known as on demand bonds.

On demand guarantees/bonds are a means of securing payment or other obligations. Banks are often requested by their customers to issue on demand guarantees/bonds in connection with a contractual obligation which the bank's customer has entered into with a third party where there is some doubt over the bank's customer's ability to pay or perform its obligations under that contract. For more information, see Practice Note: On demand guarantees and bonds.

Performance bonds are used where the underlying obligation is not the payment of money, but the performance of other obligations.

Performance bonds often arise in the context of construction, for example, where the employer under the construction contract requires security for the building contractor's obligations under

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