Bowie Bonds
From Wikipedia, the free encyclopedia
Bowie Bonds are asset-backed securities of current and future revenues of 25 albums (287 songs) that David Bowie recorded before 1990.
Issued in 1997, the bonds were bought for US$55 million by the Prudential Insurance Company. They paid an interest rate of 7.9%. Collateral was royalties from the 25 albums.[1] The average life of the bonds was ten years.[2]
By forfeiting[citation needed] ten years worth of royalties, Bowie was able to receive US$55 million up front. Part of the money was used to buy out some rights to Bowie's songs owned by a former manager. Bowie was able to issue the bonds because, unlike many artists, he had kept control of his copyrights and master recordings.[2]
The Bowie Bond issuance was perhaps the first instance of intellectual property rights securitization. The securitization of the collections of other artists, such James Brown, Ashford & Simpson and the Isley Brothers, later followed. These Bonds are named Pullman Bonds after David Pullman, the banker who pushed the original Bowie deal.
In March 2004, Moody's Investors Service lowered the bonds from an A3 rating (the seventh highest rating) to Baa3, one notch above junk status. This downgrade was prompted by lower-than-expected revenue "due to weakness in sales for recorded music." A downgrade to an unnamed company that guarantees the issue was also cited as a reason for the downgrade.
The success of Apple's iTunes and other legal online music retailers has led to a renewed interest in Bowie and Pullman Bonds.[3]
[edit] References
- ^ "The Pullman Group -- David Bowie Bonds", fetched 15 March 2009.
- ^ a b "The Pennsylvania Gazette: David Pullman", fetched 16 March 2009.
- ^ "Bankers Hope For a Reprise Of Bowie Bonds", 23 August 2005.
