What are debt issuance costs and are they always incurred when borrowing money?
Debt issuance costs are the underwriting, legal, and administrative fees required to issue the debt. These fees are significant when issuing debt in the public markets, such as bonds. However, other types of debt, such as private placements or bank loans, are cheaper to issue because they require less underwriting, legal, and administrative support. Consequently, the public issuers of debt are typically Fortune 500 companies, while middle-market companies tend to issue debt through private placements.
