In a recent study of 800 municipal bond issues for UC Berkeley, I found that issuance costs varied widely – from less than 0.2% of face value to over 10%. Issuance costs are to local governments like points are to a consumer taking out a home mortgage. In both cases, the goal should normally be to minimize them. While consumers can compare financing costs from different providers, local government officials have been less fortunate – but that situation is starting to change.

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