What Are Bond Issue Costs?

Bond issuance costs refer to the expenses related to the issuing activities of the issuer in the process of issuing bonds.

Bond issue cost

Right!

Bond issuance costs refer to the expenses related to the issuing activities of the issuer in the process of issuing bonds.

Chinese name

Bond issue cost

Foreign name

Bond issue cost

Definition

Expenses related to issuing activities

Content

Securities printing fee, issuance fee, etc.

details

Specifically, bond issuance costs mainly include the following:

1. Securities printing fee. It refers to the expenses of securities in the printing production process. Including paper fee, design fee, plate making fee, ink fee, labor cost, etc.

2. Issuance fee. Refers to the fees paid by the issuer for entrusting financial intermediaries to issue securities on their behalf. The factors that determine and influence the level of securities issuance fees are the total issuance, the total amount of issuance, and the creditworthiness of the securities issuer.

3. Advertising costs. In order to expand the issuer's own social influence and popularity in the business community, to enable the general public to understand the issuer more fully and comprehensively, and to deepen the public's impression of the issuer, a lot of publicity and advertising work must be done. The cost of publicity and advertising varies according to the issuer's social popularity, the form and scope of publicity advertising, and the amount of securities issued.

4. The difference between the issue price and the face value. The issue price is the price charged to the investor when the securities are issued, and the face value of the coupon is the amount printed on the face of the bond. In general, the issue price is lower than the face value. At this time, the difference between the issue price and the face value is also an element that constitutes the cost of issuing securities.

5. Attorney fees. Fees to be paid when issuing securities due to the use of lawyers to deal with legal issues.

6, guarantee and mortgage costs. If the bonds issued by the enterprise are guaranteed bonds, a third party is required to provide guarantees with their own property. Since the guarantor assumes the responsibility of the issuer to pay the principal and interest if it is unable to return the bond at maturity, the issuer of the bond needs to pay a certain percentage of the guarantee fee based on the amount of the guarantee.

7. Credit rating and asset revaluation expenses. When companies issue bonds, they generally automatically apply to credit rating agencies to assess credit ratings to facilitate the issuance of securities. Credit rating fees generally have nothing to do with the amount of issuance and are usually calculated based on the number of ratings.

8. Other issuing expenses. It refers to other benefits provided to investors, such as free or preferential goods, gift souvenirs, free travel, and prize sales.

9. Interest. Refers to the fees paid by enterprises to investors at the coupon rate of the bonds