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What is a Bowie Bond?
A bowie bond is an example of a celebrity bond and was introduced by David Pullman in 1997, the investment banker of David Bowie. A celebrity bond is usually music-based. These bonds were issued in 1997 as asset-based security to cover the current and future revenue from 25 albums of David Bowie for a period of 10 years.
How Does a Bowie Bond Work?
The 25 albums covered by Bowie Bonds were his songs released before 1990, these were used as the underlying security. They were purchased by Prudential Financial for a sum of $55 million with an interest rate of 7.9% The bonds began to depreciate in early 2000 as there was the introduction of online music and MP3. In 2004, the bonds were downgraded by Moody to a level just above junk status. In 2007, the bowie bonds matured and liquidated to Bowie. Later several artists jumped on the bandwagon of using intellectual property rights as a basis for securities. Some of the other artistes are; Ashford & Simpson, James Brown, Iron Maiden, Isley Brothers, and Rod Stewart