DEFINITION of 'Bowie Bond'

An asset-backed security which uses the current and future revenue from albums recorded by musician David Bowie as collateral. The 25 albums a Bowie bond uses as their underlying assets were recorded prior to 1990. David Bowie used the proceeds from the bond sale to purchase old recordings of his music. In creating the bonds, he ultimately forfeited royalties for the life of the bond (10 years).

Bowie bonds are also known as "Pullman bonds" after David Pullman, the banker who created and sold the first Bowie bonds.

BREAKING DOWN 'Bowie Bond'

Bowie bonds, issued in 1997, had an interest rate of 7.9% and a life of 10 years. The Bowie bonds were purchased by Prudential Insurance for $55 million.

Bowie bonds represented one of the first instances of a bond that used intellectual property as the underlying collateral. The value of the bonds began to decline as online music and file sharing grew in popularity, decreasing album sales. This resulted in a downgrade by Moody's in 2004. However, the advent of legal online music retailers renewed interest in these securities in the latter part of the decade.

RELATED TERMS
  1. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  2. Bond Yield

    The amount of return an investor will realize on a bond. Several ...
  3. Bond

    A debt investment in which an investor loans money to an entity ...
  4. Continuous Bond

    A financial guarantee commonly used in international trade that ...
  5. Bond Option

    An option contract in which the underlying asset is a bond. Other ...
  6. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
Related Articles
  1. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  2. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
  3. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  4. Investing

    An Introduction to Individual Bonds

    Individual bonds are better than bond funds and can be a key component to one’s investment strategy.
  5. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  6. Investing

    The Best Bet for Retirement Income: Bonds or Bond Funds?

    Retirees seeking income from their investments typically look into bonds. Here's a look at the types of bonds, bond funds and their pros and cons.
  7. Investing

    Top 6 Uses For Bonds

    We break down the stodgy stereotype to see what these investments can do for you.
  8. Investing

    Sony Resumes Vinyl Record Production After Nearly 3 Decades

    Sony Corp. is going retro, bringing back vinyl records 28 years after the Japanese entertainment company stopped making them.
RELATED FAQS
  1. What determines the price of a bond in the open market?

    Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >>
  2. How does face value differ from the price of a bond?

    Discover how bonds are traded as investment securities and understand the various terms used in bond trading, including par ... Read Answer >>
  3. Why is my bond worth less than face value?

    Find out how bonds can be issued or traded for less than their listed face values, and learn what causes bond prices to fluctuate ... Read Answer >>
  4. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
  5. What causes a bond's price to rise?

    Learn about factors that influence the price of a bond, such as interest rate changes, credit rating, yield and overall market ... Read Answer >>
Hot Definitions
  1. Payback Period

    The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
  2. Collateral Value

    The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Current Account

    The difference between a nation’s savings and its investment. The current account is defined as the sum of goods and services ...
  5. Liability

    Liabilities are defined as a company's legal debts or obligations that arise during the course of business operations.
  6. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
Trading Center