David Bowie will be remembered for his astounding musical career. He kept working until the end, releasing his 25th studio album ‘Blackstar’ just days before his death.
But he was also a financial innovator. He invented Bowie Bonds, which allowed people to invest in his future earnings.
The bonds started trading in 1997 and raised £35 million for Bowie after they were sold to the American insurance company Prudential Insurance Inc. Prudential did not respond to requests for comment by press time.
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Bowie Bonds gave investors impressive returns of 7.9 per cent, backed by future income from his back catalogue. Bowie got the money up front, but forfeited his royalties for the next ten years.
He reportedly used the money to buy songs owned by his former manager.
The bonds fell to earth in 2004, when Moody’s Investors Service downgraded them to one notch above junk because of “weakness in sales for recorded music”. They expired in 2007.
Bowie Bonds led none other than Evan Davis to ask “Is David Bowie to blame for the credit crunch?”
“The banks were catching on to the idea. They thought: 'We have billions out there in mortgages which are going to pay us back very slowly. Why don't we sell those and get the money now?' So the banks started doing what Bowie had done - in a big way,” Davis wrote.
Celebrity bonds have since been used by other musicians including James Brown and the Isley Brothers.
Rick Wakeman of Yes testified to David Bowie’s business mind when he was asked about his best financial move in an interview in 2014:
“Undoubtedly listening to David Bowie who said: 'Be your own man and don’t listen to people who don’t know a hatchet from a crotchet and try to fulfil their own ideas through you because they haven’t got any,'" Wakeman said.
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