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Concord Secures $1.7 Billion Through Asset-Backed Security to Strengthen Music Catalog

WHAT'S THE STORY?

What's Happening?

Concord has successfully raised $1.765 billion through an asset-backed security (ABS) issuance, marking its fourth securitization offering. The company issued a series of senior notes with durations of five, seven, and ten years, with the ten-year tranche being privately placed. This issuance is notable for being the longest duration ABS at scale within the music sector. The notes are secured by Concord's extensive catalog, which includes over 1.3 million music copyrights featuring artists such as The Beatles, Beyonce, Bruno Mars, Daddy Yankee, Ed Sheeran, Michael Jackson, Pink Floyd, Rihanna, Taylor Swift, and The Rolling Stones. The catalog is valued at more than $5.1 billion, and the notes received high ratings from KRA and Moody's. The transaction was structured by Apollo through its Capital Solutions business, alongside affiliates ATLAS SP Partners and Redding Ridge Asset Management.
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Why It's Important?

This financial maneuver is significant as it underscores Concord's strategy to ensure long-term access to institutional capital, which is crucial for its growth and expansion. By refinancing existing debts and extending funding notes, Concord aims to lower its cost of capital while expanding its global capabilities. This move supports the company's mission to elevate the voices of artists worldwide, providing them with robust financial backing. The successful ABS transaction reflects Concord's innovative approach to music securitization, setting a precedent in the industry with the first 10-year tranche. The involvement of major financial entities like Apollo and ATLAS SP highlights the confidence in Concord's catalog and its potential for continued growth.

What's Next?

Concord plans to use the proceeds from this ABS issuance to repay $1.65 billion owed from its 2022 ABS and refinance its $109 million variable funding note. The company is expected to continue leveraging ABS transactions as a vital part of its growth strategy, focusing on expanding its catalog and frontline roster. This financial strategy will likely enable Concord to pursue further acquisitions and strengthen its position in the global music industry. Stakeholders, including artists and songwriters, may benefit from enhanced support and opportunities as Concord builds upon its financial foundation.

Beyond the Headlines

The securitization of music catalogs represents a growing trend in the industry, where companies seek to monetize their intellectual property through structured financial products. This approach not only provides immediate capital but also reflects the increasing recognition of music catalogs as valuable assets. The ethical and cultural implications of such transactions may involve discussions on the ownership and control of artistic works, as well as the long-term impact on the creative industry.

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