Moody's Considers Bowie Bond Clip

May 27, 2003 ( - Ground control to Major Tom - you may have made the grade, but your bonds might be looking at a downgrade by Moody's Investors Service.

In light of the sales slump in the recording industry, Moody’s is considering lowering the A3 rating the $ 55 million in bonds backed by future music royalties from British rocker David Bowie currently command.     That’s  the seventh highest rating on Moody’s scale, according to a Reuters report.

Bowie, known for such hits as “Space Oddity” and “Fame”, became the first musician to sell bonds supported by future revenues generated from his record master and publishing rights in 1997 (see  David Bowie issues asset-backed securities ).   The sale of these asset-backed securities to private investors raised $55 million upfront for musician. 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,” Moody’s said in a release.