Concord offers $1.8 billion worth of bonds backed by over 1 million music copyrights

Late last month, Concord reportedly began a process that would result in it becoming the latest major music company to launch a bond offering through securitized royalties from copyrights.

according to a Bloomberg report, financial giant Apollo Global Management sold a $1.65 billion bond backed by music rights from Concord’s catalogue, which would mark the music company’s first securitization.

On Thursday (December 8), Concord confirmed that the price had been successfully set $1.8 billion by Senior Notes, backed by a “substantial portion” of its catalog of sound recordings and songs.

According to a press release, Apollo structured the ABS (asset-backed securities) transaction through its Capital Solutions business, forming a syndicate of investors led by funds managed by Apollo.

JP Morgan acted as co-structurer of the transaction. Concord says the proceeds from the offering will be reinvested to support the company’s growth in 2023 and beyond.

The transaction is described by Concord as “the largest asset-backed music rights securitization offering in the industry to date, both in terms of volume of issue and number of assets (over one million copyrights)”.

Concord’s new five-year rig is supported by a catalog of more than 1 million music assets spanning a wide range of genres, including over 300 Grammy Award-winning artists and more than 400 gold, platinum, multi-platinum and diamond recordings Industry Association of America (RIAA) certifications.

The works in the securitization catalog alone include songs and recordings by Phil Collins, Creedence Clearwater Revival, Daft Punk, Miles Davis, Danny Elfman, Evanescence, John Fogerty, Genesis, Imagine Dragons, Isaac Hayes, James Taylor, Jewel, Joan Sebastian, Nine Inch Nails , Pink Floyd, Cyndi Lauper, Little Richard, Nikki Six, Otis Redding, REM and many other superstars.

Concord adds that its catalog is more than appreciated 4 billion dollars, “resulting in an approximate LTV of 44% for the offering,” and the Notes are rated A+ by KBRA.

Concord says in its press release that its transaction “reflects the growing value of music copyrights and increased interest by financial institutions in music royalties as a long-term, annuity-like asset class.”

“The music industry is experiencing a period of sustained expansion, driven by exponential growth in the global streaming market, new marketing platforms, increased collector demand for records, and music distribution platforms diversified with the integration of new technologies,” adds Concord. “These combined factors benefit both legacy catalogs and new releases, while also boosting artist and songwriter revenues.”

“Concord has reached a new milestone in its own development and for the broader global industry by pricing the largest music ABS transaction in history.”

Bob Valentine, Eintracht

“Concord has reached a new milestone in its own development and for the broader global industry by pricing the largest music ABS transaction in history,” said Bob Valentine, President of Concord.

“I am proud to lead a company that works with the amazing depth and breadth of artistic talent represented by the works funded through this securitization. I am also extremely grateful that a significant number of top-tier financial institutions have taken note of our success to date and have chosen to be a part of our future.

Valentine added, “As we continue to better position Concord as an industry pioneer, our focus remains the same: elevating the voices of artists and musicians using the global, independent platform we’ve been building for years.

“We are grateful to our funding partners at Apollo and JP Morgan, who have helped us develop a long-term capital solution that reflects the strength of the portfolio we have built to date and further validates our active management strategy.”

“We are pleased to be able to offer a tailor-made, flexibly structured solution that will support their continued growth.”

Bret Leas, Apollo

Bret Leas, Head of Asset-Backed Finance at Apollo Partners, said: “Concord’s experienced management team continues to build a world-renowned catalog of assets with diversified and cash-flow characteristics well suited for asset-based lending.

“We are pleased to be able to offer a tailor-made, flexibly structured solution that will support their continued growth.”

“Having known the Concord board and management team for many years, we look forward to supporting their future success.”

Paul Sipio, Apollo Capital Solutions

Apollo Capital Solutions’ Paul Sipio added: “This transaction leverages the scale of our investment platform alongside our growing Capital Solutions business to develop, anchor and syndicate a comprehensive financing solution.

“Having known the Concord board and management team for many years, we look forward to supporting their future success.”

Today’s news comes just over 12 months ago. MBW told you that financial bonds were about to become a big thing in the music business.

This prediction has been confirmed time and again over the past year, as a series of headlines have appeared on our site about music companies offering bonds through securitized copyright royalties.

In December 2021, for example, private equity firm Northleaf Capital announced it would raise $303.8 million through the sale of asset-backed securities (ABS) backed by music rights — including songs written by Pete Townshend for The Who and created by country music star Tim McGraw.

Corresponding Bloombergthe securities would be supported by publishing and sound recording rights as well as other revenue streams for a total of 52,729 songs.

These songs make up a large part of Spirit Music Group’s catalogue; Spirit owns a total portfolio of more than 100,000 music assets.

Our prediction came true again in February, when MBW reported that KKR – through its Chord Music venture – acquired a large portfolio of rights from Kobalt for $1.1 billion in the second half of October 2021 and intended to issue that catalog in bonds to securitize.

Corresponding BloombergKKR Credit Advisors uses a catalog of 65,000 songs – including hits by The Weeknd, Stevie Nicks and Childish Gambino – to sell more than $732 million in asset-backed securities backed by publishing and sound recording royalties.

More out of this world news arrived over the summer, with a pre-sale report from the Kroll Bond Rating Agency (KBR) confirming that Hipgnosis was in the process of launching its own paid music bond package – a $221.65 million certified offer.

US music licensing/collecting society SESAC also closed a $335 million Bond transaction over the summer. This offer was actually a securitization of the entire company Bloomberg compared in its report at the time to SESAC “effectively pledging” its company.

In September, Concord acquired the publishing and recording catalogs of Tony Banks, Phil Collins and Mike Rutherford, as well as the publishing and recording catalog from their years in the band Genesis, in a deal That Wall Street Journal reported to be worth over $300 million.

The news followed a series of Concord’s recent M&A activities, including the purchase of the assets of HitCo Entertainment and the eight-figure acquisition of Australia and New Zealand-based music publisher Native Tongue.

Concord spent an estimated $1 billion on acquisitions in its first 14 years of existence. It then spent two nine-figure sums to acquire a majority stake in Pulse Music Group and then the Imagine Dragons publishing catalog in 2020, before acquiring Downtown’s copyright portfolio for $400 million in 2021.

FTI acted as rating agent in the transaction and KBRA provided rating services. DLA Piper served as legal counsel to Concord and King & Spalding LLP served as legal counsel to Apollo subsidiaries.

Reed Smith and Greenberg Traurig acted as special advisors on music assets to Concord and to Apollo subsidiaries, respectively.music business worldwide