BOWIE BANKER
SEES NO DIPS FOR BONDS

By BRENDA BOUW

He is known in the entertainment industry as the "Bowie Banker," creator of a $55-million (US) bond issue backed by future earnings of rock star David Bowie.

Since that 1997 deal, David Pullman has developed royalty bonds for such artists as the Motown trio of Edward and Brian Holland and Lamont Dozier (Stop! In The Name of Love), Nickolas Ashford and Valerie Simpson (Ain't No Mountain High Enough), and is in the talks for similar investments with Crosby, Stills & Nash and the Rolling Stones and a high-profile male Canadian singer/songwriter he won't name.

But despite his Pullman Group holding bonds from various artists totaling more than $100-million (US) and the complicated nature of securitization, Mr. Pullman gets asked the same thing time and again.

"The first question everyone asks me is if I have ever met David Bowie," he said at an appearance in Toronto yesterday for Canadian Music Week.   "Then they ask if I have met his wife," supermodel Iman.

He has, but for Mr. Pullman, royalty bonds are about more than doing business with the stars.

Pulling out a handy "benefits" list from his briefcase, the fast-talking Mr. Pullman cites everything from fixed rates to liquidity, diversity and low administration costs as reasons why music future royalties securitization is better than a bank loan or publisher's advance.

He also scoffs at the suggestion the musician bond market has sagged since his Bowie deal, thanks to volatile markets and a lack of interest.

Critics, including investment banks that have tried similar deals, say the bonds are more about hype than value.

The believe is that when Bowie Bonds were issued two years ago, at a 7.9% interest rate from the singer's 25-record catalogue, the economy was charging and years of low interest rates made the bonds attractive.

Now that markets are slowing down, investors are a little wary of experimenting with new-style investments.

Mr. Pullman disagrees, saying royalty bonds are becoming more popular, not less.  He said his competitors are simply jealous they haven't been as successful with the investment model he created.

"Three months after I started it, other people tried to copy me.   Six months later, it was everyone else's idea.  We keep going at it.   Other people have tried and failed."

Nomura Capital Entertainment, for example, negotiated a $15-million securitized loan against future royalties of rock star Rod Stewart, believing it couldn't justify a bond issue.

Some banks see trouble with bond issues because only a few artists such as Bowie own the rights to their original recordings.  In Mr. Stewart's case, for example, the record company owns the rights and the artist is paid royalties based on income.

Financial Post, March 5, 1999.