Costs that a issuer pays directly to the service providers in a bond issuance transaction. These service providers include, but are not limited to, the financial or municipal advisor, bond counsel, issuer’s counsel, rating agencies, and bond insurance providers.
Another cost incurred in the bond issuance process is the underwriter’s discount. It is a cost paid indirectly by the issuer to the underwriter for selling the bonds to investors and managing the transaction. The underwriter’s discount is deducted from the proceeds of the bonds at closing.
These costs include, but are not limited to, fees paid to the financial advisor, bond counsel, issuer’s counsel, rating agencies, and any potential underwriter’s discount. The costs are typically expressed as an amount per each $1,000 bond, for example, a $100 fee on a $10,000 debt issuance ($10,000/$1,000 = 10 bonds) would be $100 fee/10 bonds = $10 per bond. The costs per bond amount allows comparing fees on various sized bond issues. For example, a $100,000 and a $100,000,000 issuance may have a similar cost per bond.