Discussion: Bowie Bonds

Discussion: Bowie Bonds

The ‘Bowie Bonds’ were an example of an artist, David Bowie, borrowing against the future earnings of his catalog of musical works. Do you think music securitization has a future? Where would the bond collateral come from?

Solution Preview

Discussion

The Bowie Bonds were asset-backed securities which used the current and future revenues that were associated with the sale of albums from David Bowie. The Bowie bonds were first used in 1997. Bowie developed a partnership with Prudential Insurance Company and raised fifty-five million USD through promising investors that they would be repaid through the sale of albums in the future (Jones, 2017). The albums produced by Bowie were the collateral or assets that backed the borrowing. Bowie used the funds to purchase old recordings from his former manager. The royalties and rights that he received from the United States market were also securitized into the bonds thereby forfeiting the royalties over the life of the bonds

(592 words)