In a securitization deal structured and led by Apollo, music company Concord struck a positive chord with investors who oversubscribed the $1.765 billion transaction by three times.
The deal is split into five-, seven- and 10-year notes rated A2 by Moody's Ratings and A+ by KBRA, with the latter what Apollo Partner Michael Paniwozik described in a statement as the music securitization industry's "first 10-year tranche." That tranche was privately placed with Apollo.
"The overall deal was more than [three times] oversubscribed, which was also the case for the original 2022 deal," said an Apollo spokesman. "So similar, strong appetite, which makes sense given the new series repays the 2022 series."
Headquartered in Los Angeles, Concord's catalog of more than 1.3 music copyrights secures the notes, featuring songs and records by artists that include The Beatles, Beyonce, Daddy Yankee, Genesis, John Fogerty, Kiss, Rihanna, Taylor Swift, and The Rolling Stones.
Concord noted in a statement that the offering represents its fourth securitization and the largest and longest tenured asset-backed term securitization of music rights to date. It added that proceeds from the issuance will be used to repay the company's $1.65 billion 2022-1 note series and refinance and extend its $100 million variable-funding note.
"ABS transactions like the one we just closed will remain a vital part of our growth strategy, allowing us to continue to lower our cost of capital while expanding our global capabilities in support of the artists and songwriters we serve," said Bob Valentine, CEO of Concord.
Moody's said its rating is based on factors including the transaction's high quality collateral comprising a seasoned catalog of music royalty streams that is highly diversified by artist, genre and vintage; growth in streaming and favorable statutory royalty rates; and the notes relatively low loan-to-value ratio of around 51%.
Apollo Global Securitiues and affiliate ATLAS SP Securities acted as joint bookrunners for the transaction, while Redding Ridge Asset Management, another Apollo affiliate, served as structuring agent. The Bank of New York Mellon acted as trustee.
