Chord Music Partners, a music intellectual property platform that grew out of a partnership with Dundee Partners and KKR, is preparing to sponsor $500 million in asset-backed securities, secured by a portfolio of music and publishing and master recording rights.
The notes will be backed by royalties from a music catalog containing more that 3,750 works from top artists and songwriters, including Diplo, ZZ Top and Morgan Wallen, and is the platform's first series of notes, according to the Kroll Bond Rating Agency.
Just one tranche of notes will be issued from the Canon Music Issuer Trust, 2026-1, KBRA said, adding that the notes have an anticipated repayment date of May 2031 and a final maturity date of May 2076.
KBRA assigns ratings of A to the class A tranche, KBRA said.
Royalty payments will include publishing rights and sound recording rights, with the two segments accounting for 34% and 66% of net publisher share and net label share of revenues over the last 12 months, the rating agency said.
As of Sept. 30, the deal's valuation date, the catalog had an estimated value of $830 million, using a discounted cash flow method and an 8.00% discount rate assumption.
The catalog has a weighted average (WA) age of about 10 years, with music released 10 years ago comprising more than 46% of the catalog, and 74% released more than five years ago. Multiple administrators or collective management organizations, including The Orchard, Republic Recordings, and Universal Music Group administer the rights in the catalog, according to the rating agency.
Universal Music Investments is the deal's manager, while Redding Ridge Asset Management is the backup manager on the deal, KBRA said.
Several features in the deal's structure boosts credit to the notes, including an initial overcollateralization level of 39.8%. Also, Canon Music Issuer Trust, 2026-1 also benefits from a debt service reserve account that covers six months of interest for the notes in each series.
The debt service return account could change if the series issues more notes. A letter of credit could help meet the requirements of the debt service reserve account.
When the deal closes, Canon Music, series 2026-1 will also benefit from a contingent liability reserve account, amounting to $5 million, to cover about 90% of the contingent liabilities that the deal would owe from July 2026 through July 2031.
