Making its debut in the term ABS market, Paramount Pictures recently priced $210 million in floating-rate notes backed by film royalties via lead manager Merrill Lynch.

The privately placed transaction received a Baa2' rating from Moody's Investors Service. Dubbed Melrose Investors, the vehicle finances a portfolio of films that will be produced or acquired by Paramount over the next three years. When fully funded, Melrose will finance 25% of the net production cost of each film just prior to its domestic theatrical release, with Paramount taking on the remaining 75%. The investment gives Melrose a participation interest in the film, which entitles it to 25% of net revenues generated by that film.

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