CROSBY, STILLS & NASH TO FOLLOW 
BOWIE'S LEAD IN ROYALTY-BACKED ISSUE

Folk group Crosby, Stills and Nash is holding discussions with financial services company Fahnestock Viner Holdings with a view to selling bonds backed by future royalties from its records.

The group, which had a string of hits in the 60s and 70s, owns its record catalogue as well as merchandising rights. The group would use the royalties earned on its catalogue to meet the payments owing on a bond issue.

If successful, the deal will follow hot on the heels of artist David Bowie's rock US $55 million royalty-backed bonds sold in February which attracted much attention in the popular press and was the first type of this transaction.

Bowie's $55m securitization was a 10 year private deal with a 7.9% coupon. Like Bowie, Crosby, Stills & Nash owns its catalogue-imperative if deals of this kind are to be done.

Fahnestock is said to enjoy an exclusive arrangement with the Rascoff Zysblat Organization, which aside from David Bowie, is also the business management company of the Rolling Stones and the estate of Ira and George Gerschwin. Indeed, Fahnestock is also working on several other securitizations, one said to be from the Rolling Stones, which could slip into the market well ahead of the Crosby, Stills & Nash issue. Analysts say that investor interest in royalty backed issues of this type is strong-not least because of the novelty value. However, it looks likely that not all rock artists and groups will be able to follow Bowie's lead.

"Investors will have to be assured that the artist, or group, had a sufficiently solid portfolio of songs, that had enduring appeal, in order to want to buy into the issues," explains a London based analyst.

Interest in a deal of this type, say issued by the Rolling Stones, would be strong. Lesser known groups might find the idea of raising funds in this way attractive, but it is unlikely that investors would think the same.

"Investors would be looking for a long term history of successful singles and albums, which would be expected to continue to sell despite the changing tastes of the popular music market," says the analyst.

International Securitization Report – May 1997 (page 4)