• Racial redress

    The next adult generation is at risk of being polarised on the basis of skin colour, says Solly Moeng.

  • To do list

    Keep separate lists to ensure your to-dos don't get cluttered and gain stress-free productivity, Ian Mann.

  • Clueless leaders

    Zim's leaders are clueless about managing the economy or leading the nation, says Malcom Sharara.

All data is delayed
Loading...
See More

Bowie's 'celebrity bond' rocked Wall Street

Jan 11 2016 17:43

Paris - David Bowie was not just a musical visionary, he also made history on financial markets two decades ago when he rocked Wall Street with a "celebrity bond", raising $55m.

In 1997, the British singer launched the securities backed by the royalties to all his pre-1980 albums, which included smash hits "Let's Dance" and "Hunky Dory".

The bonds had a 10-year maturity and carried a 7.9% coupon or interest rate, about 1.5 points above the market's benchmark, US Treasury bonds.

Securitising, by which illiquid assets are bundled into tradable securities, was already common in the mortgage and car loan sectors, but Bowie was the first to apply the same logic to song royalties.

The issue was bought by the Prudential Insurance Company of America for what was then $55m.

The 287 songs on Bowie's 25 pre-1980 albums were used as collateral.

Other artists, including James Brown, Rod Stewart and Iron Maiden later used the same technique to raise funds via celebrity bonds.

Bowie bonds attracted negative attention when rating agency Moody's Investor service in 2004 downgraded them from A3 to Baa3, just one notch above junk status, because of a downturn in the sale of recorded music.

Also in 1997, Bowie signed a deal with the EMI label giving him a $30m advance on future royalties in exchange for the worldwide distribution rights of his 1969 to 1990 catalogue.


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

david bowie  |  equities  |  international markets

 
 
 
 

Company Snapshot

We're talking about:

THE DEBT ISSUE

Debt is one of the biggest financial issues facing South Africans today. Find out how you can avoid and manage your debt with Fin24 and Debt Rescue.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Labour’s call for a cap on salary of high earners is?

Previous results · Suggest a vote

Loading...