The ballad of Bob’s bonds

In his 1968 song Dear Landlord, Bob Dylan sang, “Please don’t put a price on my soul.” More than four decades later, the investment banking giant Goldman Sachs has not only put a price on Dylan’s soulful songs, but boasts to investors that the 1960s counterculture balladeer offers an attractive 5.25 per cent yield to boot.

Sesac Inc., a company from Nashville that owns the exclusive rights to the public performance of Dylan’s music, is preparing to raise US$300 million through an unusual bond offering. The bonds will be backed by the royalties Sesac gets any time someone performs songs by Dylan, or any of its other clients, including Neil Diamond and Canadian rockers Rush.

With central banks worldwide keeping interest rates at record lows of nearly zero per cent, all in a bid to jump-start the economy, investors are desperate for anything that promises a decent return. The offering, however, is available only to “qualified institutional buyers” with investable assets greater than US$100 million. The Bob Bonds haven’t necessarily struck a chord with the industry. The debt rating agency Standard & Poor’s assigned the bonds a rating just a notch above junk status because of the vagaries of royalty payments.

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