Stewart, Maiden issues may be affected by sales slump

Moody’s seems to think Bowie bonds may go from diamonds to dogs.

The investors service said Tuesday that it’s reviewing whether to cut ratings on bonds backed by royalties of recording artist David Bowie because of an industrywide drop in music sales. Some $40 million of the $55 million in such bonds issued since 1997 may be affected, Moody’s estimated.

The ratings service said its review Bowie bonds was prompted by a “weakness in sales for recorded music” and a recent ratings cut for the EMI music group.

EMI’s debt was downgraded in March by Moody’s, to Ba1 junk status from a previous investment-grade rating of Baa2. Moody’s rates the Bowie bonds — issued by Jones/Tintoretto Entertainment — at A3, a relatively strong investment-grade rating.

The early success of the Bowie bonds prompted similar issues backed by royalties from other artists such as Rod Stewart and Iron Maiden. It wasn’t immediately clear whether any of those bonds might be affected by similar ratings reviews.

Proponents of the catalog-related issues say such moves allow artists to raise money without selling off their works completely. Such bonds also allow artists to reap financial rewards on royalties earlier than otherwise would be possible, they say.

(Bloomberg News contributed to this report.)

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