Moody's Investors Service says it may downgrade about $55 million of bonds backed by music royalties of rock icon David Bowie in light of the sales slump in the recording industry.

Moody's Investors Service says it may downgrade about $55 million of bonds backed by music royalties of rock icon David Bowie in light of the sales slump in the recording industry.

In 1997, Bowie was the first musician to sell bonds supported by future revenues generated from his record master and publishing rights. Coordinated by David Pullman of the Pullman Group, the sale of these asset-backed securities to private investors raised $55 million upfront for the British rocker.

Since the Bowie deal, musicians and songwriters like James Brown and the Isley Brothers issued similar bonds backed by expected future revenues from their music catalogs.

"The rating review was prompted by lower than expected revenues generated by the assets due to weakness in sales for recorded music as well as the recent downgrade of an entity that provides credit support to the transaction," the bond rating agency said last week.

Moody's originally assigned the Bowie bonds an A3 rating, the seventh highest rating on its scale.

Pullman tells Billboard Bulletin the Bowie bonds were placed on Moody's watchlist mainly because of the recent downgrading of bonds held by major label EMI. He points out that even if they were downgraded "several notches," the Bowie bonds would continue to carry an investment-grade rating. "The deal has outperformed everything in the corporate bond world," he says.


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