The offer price is set by the issuer or determined based on the results of a bidding process or auction. For shares, it may differ from par value; for bonds, it is expressed as a percentage of par value and equals 100% when offered at par.
An offering below par represents a discount: the investor pays less and receives the full par value at maturity, with the difference constituting part of their income. An offering above par creates a premium, which conversely reduces overall yield relative to the coupon rate. Therefore, the offer price directly determines both current yield and yield to maturity.
For shares, the offer price has a different significance: it sets the terms under which new shareholders enter the company. An offering below fair value leads to losses for existing owners, while exceeding par value generates share premium for the company.
A practical consideration when participating in an offering: the price is proposed by the selling party and has not been confirmed by the market. It should be evaluated against comparable instruments already trading in the secondary market.