Recognition Music Group – the Blackstone-owned company that now controls the portfolio of music formerly known as Hipgnosis – is planning a $372-million issuance of five-year bonds backed by its multi-billion-dollar music catalog.
That catalog includes recorded music and/or publishing rights from artists such as the Red Hot Chili Peppers, Journey, Justin Bieber, and Shakira.
Proceeds from the transaction will be used to fund Recognition’s reserve accounts, repay existing debt, cover certain transaction expenses, and go towards general corporate purposes, according to a report from Kroll Bond Rating Agency.
Kroll notes that the Recognition catalog’s assets include those from the “legacy” Hipgnosis Songs Fund (HSF) portfolio.
According to Kroll’s report, based on a third-party valuation as of March 31, the catalog backing Recognition’s ABS transaction was worth USD $2.95 billion, inclusive of $340.8 million in additional assets that Recognition added to it.
This suggests the portfolio that until recently was known as Hipgnosis Songs Fund (HSF) was worth $2.61 billion as of the end of March (excluding $340.8 million in additional assets added by Recognition.)
It also suggests that the HSF music rights portfolio built by Merck Mercuriadis has been rapidly growing in value since funds controlled by Blackstone acquired it in the summer of 2024.
As recently as last October, KBRA valued the HSF portfolio at $2.36 billion; Blackstone’s purchase price for HSF several months earlier implied a value of $2.2 billion.
According to KBRA’s analysis, Recognition’s portfolio of around 47,000 master recordings, compositions, and related assets consists almost entirely of catalog. The weighted average age of the music is around 21 years, with 76% released more than 10 years ago and 96% released more than five years ago.
KBRA describes it as a “large, diversified catalog with globally recognized songs and artists,” but notes that its revenue is fairly concentrated: The top 10 songs in the portfolio account for around 11% of the royalties.
The rights in the portfolio are administered by numerous publishers and CMOs, among them Kobalt, Sony Music Publishing and Universal Music Publishing Group.
KBRA gave the bond issuance a rating of A, which is its third-highest ranking (high credit quality, low risk of default). It also noted that it expects to upgrade its rating on the previous bond issuance from Recognition, from A- to A.
“Streaming revenues continue to represent a positive tailwind to industry growth and catalog cashflow, even as streaming growth rates have begun to decelerate in certain markets.”
KBRA
That previous issuance of $1.47 billion in music asset-backed bonds closed last November, and has made Recognition/Hipgnosis one of the most prolific issuers of ABS in the music industry. Its latest bond issuance uses the same music portfolio as collateral.
“Streaming is one of the primary drivers of music industry growth and represents the majority of royalty cashflows generated by the [Recognition] catalog,” KBRA analysts wrote.
“Streaming revenues continue to represent a positive tailwind to industry growth and catalog cashflow, even as streaming growth rates have begun to decelerate in certain markets.”
The report cited IFPI data showing that streaming revenue from recorded music increased from $1.8 billion, or 14% of all recorded music revenue, in 2014 to $20.4 billion, or 69% of all recorded music revenue, in 2024.
“Streaming growth declines are not uniform across all markets, with saturation having more of an impact on developed markets versus undeveloped markets. Even in markets that may be reaching a level of subscriber saturation, this is offset to some extent by generally positive pricing trends,” KBRA added.
Recognition’s latest debt issuance comes amid growing popularity of asset-backed debt among music companies.
Most recently, Concord closed a $1.76-billion ABS issuance backed by a portfolio of recorded and publishing rights from artists such as The Beatles, Beyonce, Bruno Mars, Daddy Yankee, Ed Sheeran, Imagine Dragons, Kiss, Michael Jackson, Pink Floyd, R.E.M., Rihanna, Taylor Swift, The Rolling Stones and many others.
It was Concord’s fourth securitization offering and was described as “the largest and longest tenured asset-backed term securitization of music rights to date,” with bond terms ranging from five to 10 years.Music Business Worldwide
