While reading about legendary musician David Bowie, who died from cancer at age 69 last week, I was surprised to learn that in addition to music he also had a huge influence on Wall Street.
In 1997, he sold $55 million of “Bowie Bonds” that were backed by future royalties from some of his hit songs. The bonds allowed Bowie to raise money immediately without selling the rights to his work or waiting years for the royalty payments to trickle in. They also benefited investors by paying almost an 8% annual return over 10 years.
The bonds helped inspire Wall Street to create more esoteric asset-backed securities from things such as billboard rental income, cellphone tower lease payments, and literary or film libraries. This unique asset class deal volume has grown to about $40 billion!
— Jason Gunkel