Concord has reportedly begun a process that could see it become the latest large music company to get into the financial bonds game.
Financial giant Apollo Global Management is reportedly selling a $1.65 billion bond backed by music rights from Concord’s catalog, which would mark the music company’s first securitization.
That’s according to Bloomberg, citing people with knowledge of the matter, who said that Apollo ‘has already secured an anchor order for a large chunk of the debt’.
The report adds that the deal ‘repackages royalty payments’ from both publishing and recorded music rights, ‘from a catalog of music by several singers and songwriters,’ including Phil Collins, Genesis, Evanescence and R.E.M.
Bloomberg notes that a ‘spokesperson for Concord said the firm is considering selling bonds, and directed further inquiries to Apollo, a representative for which declined to comment’.
Citing a presale report, Bloomberg says that Kroll Rating Bond Agency ‘is expected to rate Concord’s securities and is set to assign them an A+ rating’.
Today’s news comes just over 12 months MBW told you that financial bonds were about to become a big deal in the music business.
That prediction came true, time and time again, over the past year, with a number of headlines hitting our pages about music companies launching bond offerings via securitized royalties from copyrights.
In December 2021, for example, private equity company Northleaf Capital announced it was raising $303.8 million by selling Asset-Backed Securities (ABS) that are supported by music rights – including songs created by Pete Townshend for The Who, and by country star Tim McGraw.
According to Bloomberg, the securities would be supported by both publishing and sound recording rights, as well as other income streams, across a total of 52,729 songs.
Those songs make up a chunk of the catalog of Spirit Music Group; Spirit owns a total portfolio of more than 100,000 music assets.
Our prediction came true again in February, when MBW reported that in the second half of October 2021, KKR – via its Chord Music venture – acquired a large portfolio of rights from Kobalt for $1.1 billion and intended to securitize that catalog into bonds.
According to Bloomberg, KKR Credit Advisors is using a catalog of 65,000 songs – including hits from The Weeknd, Stevie Nicks, and Childish Gambino – to sell more than $732 million of asset-backed securities supported by publishing and sound recording royalties.
Over the summer, more news from this world arrived, with a pre-sale report from Kroll Bond Rating Agency (KBRA), confirming that Hipgnosis was in the process of launching its own music royalty-backed bond package – a $221.65 million securitized offering.
US music licensing/collection society, SESAC also closed a $335 million bond transaction over the summer. This offering was actually a whole-business securitization, which Bloomberg likened in its report at the time to SESAC “effectively mortgaging” its company.
In September, Concord acquired the publishing and recorded music catalogs of Tony Banks, Phil Collins and Mike Rutherford, as well as the publishing and recorded music catalog from their years in the band Genesis in a deal The Wall Street Journal reported to be ‘valued at over $300 million’.
The news followed a string of recent M&A activity from Concord, such as its purchase of the assets of HitCo Entertainment and its eight-figure acquisition of Australia & New Zealand-based music publisher, Native Tongue.
Concord spent an estimated $1 billion on acquisitions during its first 14 years in business. It then spent two nine-figure sums acquiring a majority stake in Pulse Music Group in 2020, and then the Imagine Dragons publishing catalog, before acquiring Downtown’s copyright portfolio for $400 million, in 2021.Music Business Worldwide