Issuers can expect to pay more for their letters of credit, both when borrowing in today's market and when renewing the enhancements for older variable-rate transactions, according to a panel of public finance bankers.

Due to a convergence of deteriorating credit quality, international capital guidelines, and a sharp focus on return on equity, letter-of-credit banks are raising fees, the panelists said. And since the trends are market-wide, public entities will have little competitive recourse.

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