Bowie Bonds

 

 

 

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Bowie Bonds

·       In 1997, David Bowie released the so-called Bowie Bonds, which were a new financial structure financed by his music royalties (World International Property Organization, 2016).

·       The issuance issued securities worth US $55 million by securitizing royalties to 25 albums recorded prior to 1990 (approximately 287 songs) (Chen, 2025).

·       Key terms: 10-year maturity, interest coupon ~7.9 % (Chen, 2025).

·       The bonds were asset-backed securities: the revenue streams of the catalogues of the future were used as the collateral (World International Property Organization, 2016).

·       Proceeds usage: Bowie spent part of the money to repurchase his publishing rights from his previous manager and on other investments (World International Property Organization, 2016).

·       Investor/underwriter: The issuance was organised with the help of investment banker David Pullman; the bonds were rated investment grade (A3 by Moody) when they were issued (Chen, 2025).

·       Performance / outcome:

o   Moody lowered the ratings of the bonds to Baa3 (one notch higher than junk) due to declining revenues in recorded music (Chen, 2025).

o   The bonds still matured in 2007 as envisaged, despite the downgrade, and the rights to the royalties were returned to Bowie (Majumdar, 2022).

·       Significance/innovative features:

o   This was an early case of securitisation of intellectual property (music royalties) as opposed to physical property or more traditional types of streams (World International Property Organization, 2016).

o   It has opened a new category of assets to bond investors (celebrity bonds/royalty bonds) (CFI Team, 2023).  

·       Key risks and lessons:

o   The revenue streams in the music industry may be sensitive to disruption (e.g., shift to digital sharing, streaming, etc.)—this is what impacted the rating (BBVA, 2018).

o   The model was heavily relying on the predictability of the royalties and the stability of the income of the catalogues.

·       Additional context:

o   Though the bond of Bowie is the canonical one, the idea has been used (and adapted) elsewhere in the entertainment/intellectual-property domain (Ed Christman, 2016).

 

References

BBVA. (2018, January 10). How David Bowie also revolutionized Wall Street | BBVA. NEWS BBVA. https://www.bbva.com/en/how-david-bowie-also-revolutionized-wall-street/?

CFI Team. (2023, October 13). Celebrity Bond. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/fixed-income/celebrity-bond/?

Chen, J. (2025). Understanding Bowie Bonds: Definition, Mechanics, and Impact. Investopedia. https://www.investopedia.com/terms/b/bowie-bond.asp?

Ed Christman. (2016, January 13). The Whole Story Behind David Bowie’s $55 Million Wall Street Trailblaze. Billboard. https://www.billboard.com/music/music-news/david-bowies-bowie-bonds-55-million-wall-street-prudential-6843009/?

Majumdar. (2022). Bowie Bonds: An Analysis Of Securitisation Of Intellectual Property Rights – S. Majumdar & Co. Majumdarip.com. https://www.majumdarip.com/blog_post/bowie-bonds-an-analysis-of-securitisation-of-intellectual-property-rights/?

World International Property Organization. (2016). Turn and Face the Strange: David Bowie and IP Financial Innovation. Wipo.int. https://www.wipo.int/pressroom/en/stories/bowie_ip_innovator.html? 

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