
The Bowie Bonds (2013) - shoo
https://bowiesongs.wordpress.com/2013/08/27/the-bowie-bonds/
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gojomo
Retrospectively, did the Bowie Bonds turn out to be a good investment?

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msherry
This is answered in the article. See section 3, "They (probably) were a good
investment."

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gwern
Unfortunately, OP's argument makes no sense (especially for someone who says
they used to work in finance):

"In 2004, the rating agency Moody’s Investors Service downgraded the Bowie
bonds (to Baa1, a step above “junk” status)...Yet this downgrade only would’ve
been a problem had Prudential wanted to sell its bonds, as they were now
considered to be of lesser credit quality. As far as we know, Prudential
didn’t. Instead, the Bowie bonds sat in Prudential’s coffers, generating who
knows how much in terms of royalty payments for a decade. It’s likely his
royalties decreased in the early 2000s, but Bowie was never in any remote
danger of losing his songs."

The price of a bond is merely the value of its future cash flows... If the
price fell as Moody's thought (to just above junk!), that implies the expected
cash flows (royalties) did too, because the royalties determine the price. It
is irrelevant to the question of profit whether Prudential sold them or not -
selling/holding was merely a question of whether they wanted to take their
losses up front (by selling them at the now lower market value) or over time
(by receiving lower royalties than they had predicted when they negotiated to
buy the bonds).

And we can guess pretty safely that the Bowie bonds did not do well. They were
sold at the height of a bubble before the Internet impact on sales became
apparent, no one wanted to do such deals after a few imitators did, the decay
in bond quality was so obvious a ratings agency would downgrade them,
Prudential doesn't appear to want to discuss them given the paucity of
available details in this and other writeups I've seen (despite the glamor of
the association & being one of the very few financial instruments the public
is interested in), and Bowie's career during the described bond period
wouldn't've helped the royalties outperform the general music market either
(some anniversary albums, plus a lot of live touring whose income presumably
didn't go to the bonds - and perhaps that was precisely why he did so many, a
kind of moral hazard).

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weRven0m
What is the framework, procedure, or legal guidelines for securitization and
the selling/trading of the securities? Where may I refer for more details on
this?

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nraynaud
Did this thing interact with Chris Hadfield's recording of "Space Oddity"? I
remember him telling it was a nightmare of law to actually do proper licensing
and that basically it just stayed online because Bowie liked it.

