by Charles Pretzlik / Daily Telegraph
5th February 1997
DAVID Bowie, The Man Who Fell To Earth, has landed on Wall Street and picked up $55m (£34m) from the issue of bonds backed by future royalty payments on his music.
The deal, which closed at the weekend, is the first in which music royalties have been used as security on bonds instead of more common assets such as credit-card payments or car leases. Bowie’s bonds, which have an average life of 10 years, are backed by royalties on the publishing rights and master recordings of more than 250 of the rock ‘n’ roll wrinkly’s tunes, including hits such as Let’s Dance and Changes.
Bowie is one of the few artists to own all his own record masters and by selling investors a piece of Ziggy Stardust, he gets ready access to cash instead of waiting for future royalties to come in.
But David Pullman, managing director of the structured finance group at Fahnestock & Co, the New York investment bank that arranged the deal, said the 50-year-old Bowie had opted for this unusual financing exercise “for his estate planning – he doesn’t need the money now”. His personal fortune has been estimated at £70m.
The bonds have been awarded a single-A investment rating and carry a 7.9pc interest rate, which is typical for this class of security. Once Bowie has also paid down the principal on the bonds, all future royalties will flow back to him. The bonds will not be publicly traded. Investors on Wall Street yesterday sang the deal’s praises. “It’s no different from securitising any other asset,” one banker said.