total interest cost of an offering to a bond issuer, including both coupon interest and premium or discount, and usually expressed as the total interest to maturity, using a straight line arithmetic computation that does not factor in the time value of money. The formula for calculating net interest cost is: Total Coupon Interest Payment + Discount (or - Premium) / Bond Maturity in years.
total amount of interest that a corporate or municipal bond entity will end up paying when issuing a debt obligation. The net interest cost factors in the coupon rate, any premiums or discounts, and reduces this to an average annual rate for the number of years until the bond matures or is callable. Underwriters compete tooffer issuers the lowest NIC when they bid for the deal. The underwriting syndicate with the lowest NIC is normally awarded the contract.
