DEFINITION of 'Bowie Bond'

A Bowie bond is an asset-backed security which uses the current and future revenue from albums recorded by musician David Bowie as collateral.

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


Bowie bonds were first issued in 1997 when David Bowie partnered with Prudential Insurance Company and raised $55 million by promising investors income generated by his back catalog of 25 albums. The 25 albums, which were used as the underlying assets for Bowie bonds, were recorded prior to 1990 and included classics such as The Man Who Sold The World, Ziggy Stardust, and Heroes. David Bowie used the proceeds from the bond sale to purchase old recordings of his music owned by his former manager. His rights to royalties from wholesale sales in the U.S. were securitized into bonds. In effect, by creating the bonds, he ultimately forfeited royalties for the life of the bond.

Bowie bonds, when issued, had a face value of $1,000 with an interest rate of 7.9% and a maturity of 10 years. They were also self-liquidating bonds, that is, the principal declined each year. Bowie bonds represented one of the first instances of a bond that used intellectual property as the underlying collateral. The bonds were appealing to investors because they presented what was at the time viewed as a steady long term investment. Also, the bonds were purchased by investors who seized the opportunity to own a piece of a favorite rock star. In addition, top credit rating agencies, such as Moody’s Investors Service, gave the bonds an investment grade rating, indicating that Bowie bonds were subject to a low risk of default.

The value of the bonds began to decline as online music and file sharing grew in popularity, decreasing album sales. At the dawn of the 21st century, the music business suddenly found itself in crisis as sales slumped. Bowie bondholders saw their investments tank as music fans drifted away from record stores to online file sharing platforms. This resulted in a downgrade by Moody's in 2004, lowering the bonds from an A3 rating to Baa3, one notch above junk status. However, the advent of legal online music retailers renewed interest in these securities in the latter part of the decade. The Bowie bonds matured and were redeemed in 2007 as originally planned, without default, and the rights to the income from the songs reverted to Bowie.

Bowie bonds are first in the line of Pullam bonds, which are a securitization of the collection of intellectual property rights of musical artists. Following the success of Bowie bonds, David Pullman went on to create similar bonds on the future income stream of artists such as James Brown, Ashford & Simpson, the Isley Brothers, and the Holland-Dozier-Holland publishing catalogs.

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