What are issuance costs?

Issuance costs refer to the expenses incurred when a government or organization borrows funds through the sale of bonds or other debt instruments. These costs can include underwriting fees, legal expenses, financing and administrative fees, and other related expenditures that arise during the borrowing process.

Understanding issuance costs is essential for municipal finance because these expenses affect the overall cost of borrowing, which in turn can impact project budgets and financial planning. Properly accounting for issuance costs is crucial for accurate financial reporting and for ensuring that the terms of the borrowing align with the financial resources available for repayment.