(Bloomberg) -- Carlyle Group Inc. is nearing a $464 million sale of bonds backed by music rights for artists including Katy Perry, Keith Urban and Benny Blanco, according to a person with knowledge of the matter.
The deal, which was three times oversubscribed, taps into insurers' growing demand for long-dated private credit investments. More than a dozen investors, including insurance companies and insurance asset managers are set to participate in the transaction, said the person, who asked not to be identified discussing confidential information.
The bonds have a 40-year maturity, with an anticipated repayment date of five years and are backed by a music portfolio valued at over $750 million, the person said. A representative for Carlyle declined to comment.
The sale is the first securitization of music royalties from Litmus Music, a venture Carlyle launched in 2022 with music industry veterans Hank Forsyth and Dan McCarroll. The investment firm committed $500 million, including debt and equity, to create Litmus.
Proceeds from the issuance will refinance existing debt on the portfolio and distribute a dividend to shareholders.
Private credit firms have turned their attention to asset-based financing as they've raised more capital, seeking to expand beyond the traditional realm of direct lending.
Music royalty financing has become popular with private credit managers, with portfolios achieving eye-dropping valuations in the past few years, driven by the success of streaming platforms.
Last year, Blackstone-backed Hipgnosis Song Management Ltd. issued a $1.47 billion bond sale backed by its portfolio, which includes publishing rights from the Red Hot Chili Peppers and 50 Cent.
Although streaming growth has slowed recently, and prices for music portfolios have come down, some investors still see music royalties as insulated from broader volatility in the market.
Last year, Ares Management Corp. and HPS Investment Partners participated in a private debt financing backing Hellman & Friedman's acquisition of Global Music Rights, a performance rights organization based in Los Angeles.
--With assistance from Rene Ismail.
(Adds Ares as lender in last paragraph.)
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