Debt issue costs, also called debt issuance costs, are the fees and expenses a borrower pays to raise debt, known as bond issue costs when the debt is a bond issue. The main entry explains how they are recorded and amortized and gives a worked example.
A broader label
"Debt issue costs" is the wider term. It covers the costs of arranging any form of borrowing, including a bank term loan or private placement as well as public bonds. Typical items are underwriting commissions, arrangement fees, legal and accounting fees, rating agency fees, printing and registration costs.
These costs are not expensed at once. Instead they are spread over the life of the debt and added to interest expense, so that the total cost of borrowing is recognised over the periods that benefit from the financing. In the United States, a 2015 update to GAAP changed their presentation: costs relating to a recognised debt liability are now shown as a direct deduction from the carrying amount of that debt, in the same way as a discount, rather than as a separate asset. Under IFRS, transaction costs are likewise included in the initial measurement of the loan.
Either way, the costs are usually released to expense using the effective interest rate method, which raises the effective rate of the borrowing above its stated rate. Fees for a revolving credit line that has not been drawn are often treated as an asset and amortized over the term of the arrangement.