Recognition Music Group has priced its USD $372 million asset-backed securities (ABS) offering on July 30, with the bonds carrying a 5.604% coupon and yielding 1.7 percentage point over the benchmark.
That’s according to Bloomberg, which cited a person with knowledge of the securities as saying that the bonds carry ratings of A from S&P Global Ratings, Fitch, and Kroll Bond Rating Company.
MBW now understands that the bonds were three times oversubscribed, suggesting strong investor appetite for music royalty-backed debt following Concord‘s recent $1.77 billion ABS offering and SESAC Music Group’s $889 million whole business securitization, which were both also three times oversubscribed.
Recognition’s deal represents the second public ABS under the Lyra structure and the third overall under Recognition‘s ownership.
The underlying collateral comprises 144 high-quality music catalogs containing over 47,000 compositions and recordings, according to Bloomberg.
MBW also understands that the underlying assets exceeded expectations, with current revenues running approximately 11% above 2024 forecasts used in prior appraisals.
Kroll Bond Rating Agency previously noted that the Recognition catalog’s assets include those from the “legacy” Hipgnosis Songs Fund (HSF) portfolio.
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, according to the Kroll report, which cited a third-party valuation as of March 31.
As MBW previously reported, 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.)
Proceeds from the ABS will mainly refinance existing debt on additional collateral, fund reserves, pay transaction expenses and for general corporate purposes.
The pricing comes as music rights become a more attractive alternative asset class.
Combined with Concord’s recent $1.77 billion transaction and SESAC Music’s $889 million whole business securitization, over $3 billion in music-backed securities have now been placed within a single month.
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