# Part I. Market History and Evolution

> Part of the *Music ABS and Institutional Readiness* knowledge base. See `INDEX.md` for the full map of the pack. For the central thesis, read `00 - Executive Summary.md` first.

## Market Context

The broader ABS market under which music royalty issuance falls is at a historic inflection point. Per SIFMA's December 2025 State of the Industry briefing, U.S. ABS issuance was up roughly 21% year-on-year (YoY) through November 2025, outpacing other major fixed-income asset classes. Esoteric ABS, the category that includes franchise royalties, IP-backed notes, and specialty finance, now accounts for roughly one-third of new ABS supply, up from a substantially smaller pre-GFC share. Music royalty ABS has matured as part of that esoteric expansion, and the conditions that allowed it to do so trace back to a market history that begins thirty years earlier.

## Two Eras of Music ABS

The asset class has two chapters separated by two decades, and the contrast between them clarifies why rated market access remains scarce today. The first era opened in February 1997 with the $55 million Bowie bonds, rated A3 by Moody's and purchased in full by Prudential against future royalties from 287 songs across 25 pre-1990 albums. Bowie's motivation was acquisition financing for his own master recordings, monetizing future cash flow while preserving the equity claim. Late-1990s issuances for Holland-Dozier-Holland, James Brown, and the Isley Brothers followed the same pattern of estate-planning monetization and individual-artist acquisition financing.

Those deals worked because the conditions for viability at the time were narrow but achievable, namely a single-artist rights pool with auditable royalty history under the pre-streaming label-distribution model, a long-duration insurance buyer willing to hold to maturity, and a discount rate underwritten by stable physical and broadcast cash flows. That viability did not survive the technology transition that followed. Moody's downgraded the Bowie bonds from A3 to Baa3 in 2004, citing Napster-driven royalty erosion and the difficulty of modeling streaming consumption before it existed as a verifiable data series. A 2012 Goldman Sachs-led offering of SESAC performance-royalty bonds, pulled amid weak investor demand, confirmed a freeze in the market that reflected an underwriting problem rather than a collateral problem. The cash flow base was there, but the data to underwrite it forward was not.

Recovery came when subscription streaming, institutional catalog aggregation, and private credit demand reignited the market between 2019 and 2022. The issuer rationale remained the same in this new era: monetize future cash flow without giving up the equity claim. What changed was scale and institutional infrastructure, with single-artist deals replaced by master trusts holding more than a million underlying assets, and the three or more years of song-level royalty history needed to model them forward now available. The first wave of rated deals under the modern format included Crescendo Royalty Funding 2021-1 (the first modern publicly-rated music ABS), Hi-Fi Music IP Issuer II in February 2022 (the first transaction at institutional scale), Hipgnosis MUSIC 2022-1 in August 2022, and Concord Music Royalties' December 2022 transaction (the first public master trust structure). A parallel tier of private securitizations grew alongside the public rated record, including HarbourView's 2024 and 2025 transactions and Influence Media's private ABS, using the same special purpose vehicle (SPV), true-sale, and waterfall mechanics.

Those mechanics carried across both eras, but the obligations around them did not. The requirements needed to close a 2026 transaction, detailed in Part III, did not exist as obligations in the 1997 framework, but they are what the modern rated record now expects on day one of a debut conversation. The platforms that have built that infrastructure (Concord, Recognition, Kobalt, and Seeker) account for most rated transactions by dollar volume. Per KBRA's May 2026 Playback report, KBRA rated music ABS issuance exceeded $3.3 billion in 2024 and 2025, with 2026 projections stepping down to roughly $2.5 billion due to issuer consolidation rather than weaker demand. Counting privately rated and unrated transactions, combined issuance runs higher still. The institutional sponsor and anchor relationships behind these platforms run deep: Apollo anchors Concord and structured its master trust; BlackRock anchors Influence Media; M&G anchors Seeker; and Blackstone backed Recognition through the operational rebuild that culminated in its pending May 2026 sale to Sony. The pattern across the record is that institutional sponsorship and operational infrastructure build together, which is part of why the threshold to debut is lower for sponsored platforms with day-one infrastructure than for funds rebuilding to meet rating-agency requirements in the run-up to issuance.

The path to that level of institutional participation was not immediate in the industry. Through Concord 2022 and the first wave of master trust issuance, much of the practitioner work involved investor education on copyright mechanics and asset-class behavior. Salina Sabri, Managing Director at Barclays, who led structuring on a variety of deals including Recognition's Lyra 2025-1 and on Seeker Music Group's 2026 inaugural transaction, describes the trajectory:

> "When marketing Concord's inaugural securitization in 2022, many investor meetings were highly foundational, often centered on the basics of the asset class itself. Today, investor dialogue has increasingly shifted toward platform strategy and collateral-specific nuances. What attracts ABS investors to this asset class is the demonstrated long-term predictability of the cash flows. As a result, investors are increasingly focused on factors that could introduce volatility and on ensuring that transactions are appropriately structured—and/or priced—to address such risks."
> — Salina Sabri, Managing Director, Barclays

The broadening of the investor base that has followed shows up in order-book composition as much as in headline deal size, and Sabri identifies Recognition's 2025 issuance as evidence that demand has deepened to the point where even relatively smaller follow-on transactions from established issuers attract strong institutional participation:

> "While smaller than some of the larger benchmark issuances, the transaction generated exceptionally broad demand and participation, resulting in one of the most diversified music ABS order books."
> — Salina Sabri, Managing Director, Barclays

The arc Sabri describes marks a buyer base that has moved from education to conviction, and the question now is which platforms are built to meet it.

## Four Structural Developments That Define the Market's Current State

Four developments from the deal record shape the decisions fund managers face today, each addressing a constraint that limited the earlier era.

- **Tenor extended from a 5-year ceiling to 10-year anticipated repayment dates (ARDs).** Through 2024 rated music ABS generally carried a 5-year ARD. Concord's July 2025 multi-tranche series extended that profile by placing 5-, 7-, and 10-year tranches concurrently, with Apollo placing the longest-dated music ABS at scale to date. Long-duration insurance accounts have shown they will take 10-year paper against royalty collateral, a material development for any fund operator considering tenor on a debut transaction. For a debut issuer, where longer tenor is available, the financing can be held against a long catalog hold instead of forcing a refinancing every five years while the catalog is still performing.
- **Rating-agency coverage broadened from single-agency KBRA to multi-agency standard above $500 million.** KBRA was the only agency rating music ABS through most of 2023, Moody's joined on Concord's 2024-1 issuance, and Fitch and S&P both rated deals by early 2026. The spread compression that follows lowers the cost of capital for issuers, and the move to multiple agency coverage opens the deal to insurance general accounts and asset managers that require more than one rating opinion before committing capital.
- **Master trust infrastructure has standardized, lowering the legal cost of repeat issuance.** Subsequent series now require only rating-agency confirmation that the new notes do not impair existing ratings, a supplemental presale review, and the collateral additions themselves, replacing the pre-2022 model of single-deal SPVs that required full legal reconstruction for any new issuance. Concord has issued four cross-collateralized vintages in four years against the same master trust (six series by KBRA's count) administering more than 1.3 million underlying assets, and the structure enables concurrent rating actions on existing notes.
- **Demand has consistently outpaced supply of ABS-ready collateral.** Concord 2024-1 and 2025, Recognition's Lyra 2025-1, and Canon 2026-1 each priced more than 3x oversubscribed with multi-agency coverage.

### Chart: Music Royalty ABS Issuance By Tenor

![Music Royalty ABS Issuance By Tenor](../4.%20Reference%20Charts%20(optional)/02%20-%20Music%20Royalty%20ABS%20Issuance%20by%20Tenor.png)

Source: KBRA new-issue and surveillance reports, issuer press releases, and trade press. Data as of April 30, 2026. Tenor segmentation reflects publicly disclosed deal-level data. Underlying figures: [Google Sheet](https://docs.google.com/spreadsheets/d/1pDFGYKkfV_nBMOB12sTSfJG7-0PSO4XX/edit).

**Chart data (descriptive):** The chart shows a stacked bar series of music royalty ABS issuance by year (1997, 1998, 2018, 2021, 2022, 2023, 2024, 2025, 2026), with bars segmented by tenor type (5-year, 7-year, 10-year, other / final ARD) and a line series tracking the number of deals per year. Headline takeaways from KBRA's May 2026 Playback report are:

- Cumulative issuance since 2020: ~$12.9 billion across 81 KBRA-assigned ratings (vs. $8B / 64 ratings in May 2025).
- Issuance exceeded $3.3 billion in both 2024 and 2025.
- 2026 projected by KBRA to step down to ~$2.5 billion on issuer consolidation, not weaker demand.
- Issuer count doubled from 9 (2023) to 18 (2026).

## The Structural Advantage of Rated ABS Execution

The issuer-side rationale for rated ABS over warehouse lines, privately placed securitizations, and syndicated bank facilities comes down to a cost-of-capital advantage that carries through six structural channels.

- **Weighted average cost of capital (WACC) reduction.** ABS structures support up to 65% leverage versus roughly 55% for traditional bank financing, substituting lower-cost senior debt for higher-cost equity at the margin. Senior ABS spreads clear significantly tighter than comparable senior bank or private credit debt as well, with rated A+/A music ABS pricing in the 160 to 200 bps range over swaps on recent vintages, compared to bilateral catalog facility ranges of SOFR+450–700 bps and syndicated bank revolvers around SOFR+200–225 bps. Together those produce a WACC reduction in the high double digits to roughly 100 bps relative to traditional bank financing, which works out to $3.5 to $5 million of annual interest savings on a $500 million debt stack and the bidding-power that has enabled Apollo-backed Concord, BlackRock-backed Influence Media, and Blackstone-backed Recognition through its pending May 2026 sale to Sony to outbid bank-financed counterparties on competitively contested transactions.
- **Tenor.** The rated market issues primarily at 5-year ARDs, with select 7-year placements and one 10-year tranche placed to date, against a 40-year legal final, compared with bilateral facilities that rarely exceed three to five years. The longer profile eliminates one to two refinancing cycles across the same horizon, with additional savings available for issuers that can access the longer tenor placements.
- **Match-funding.** The buyer base anchors on insurance general accounts whose asset-liability management runs on the same long duration, which supports the long-tenor pricing.
- **Repeat issuance economics.** Under a master trust, initial legal and structural setup amortizes across all subsequent series. Repeat issuers compound the cost-of-capital advantage across successive vintages, while also gaining speed and certainty in competitive acquisition processes.
- **Investor diversification.** A rated issuer is not dependent on a single bilateral lender's renewed appetite at any given refinancing point, which translates into liquidity continuity through rate cycles.
- **Institutional credibility.** A rated debut signals to LPs, counterparties, and strategic acquirers that the platform has cleared the diligence threshold institutional capital uses to assess catalog operators. That signal carries into fundraising, strategic partnerships, and exit valuations.

Paul Sipio, Managing Director at Apollo, who led the structuring of Concord's inaugural master trust and the subsequent series, describes why the advantage carries through vintages:

> "As we evaluated different options for Concord, we were able to provide an innovative solution to bring down their cost of capital by taking the substantial majority of the music catalog rights that they had acquired and organically grown and cross-collateralizing them in an ABS master trust structure."
> — Paul Sipio, Managing Director, Apollo Global Management

The Recognition Music Group transition under Blackstone is the rated record's clearest demonstration of how that compression materializes on the same collateral over time. Hipgnosis Songs Fund pre-Blackstone operated under a City National Bank facility priced at SOFR+200–225 bps, which translated to a roughly 7.3% all-in coupon at then-prevailing SOFR. After Blackstone's 2024 take-private and the operational rebuild that followed, Recognition's Lyra 2025-1 priced in July 2025 at a 5.604% fixed coupon with three-agency single-A ratings, and KBRA concurrently upgraded the prior Lyra 2024-2/3 notes from A− to A as the new series added collateral to the trust. The coupon improvement, from approximately 7.3% floating to 5.604% fixed on the same collateral in under three years, is an observable benefit of the rebuild and the move to a rated master trust. The positive effect has continued through the equity claim as well. In May 2026, Sony Music Publishing, in partnership with Singapore's sovereign wealth fund GIC, announced an agreement to acquire Recognition's catalog from Blackstone for a reported $4 billion, implying an estimated 1.8x multiple on Blackstone's July 2024 take-private at $1.58 billion equity value and roughly $2.2 billion enterprise value. The take-private through operational rebuild, the move to a rated master trust at a tighter coupon, and strategic exit at uplift show that disciplined institutional execution accumulates value across both the credit and equity claims.

### Chart: Cost of Capital Across Catalog Financing Routes

![Cost of Capital Across Catalog Financing Routes](../4.%20Reference%20Charts%20(optional)/03%20-%20Cost%20of%20Capital%20Across%20Catalog%20Financing%20Routes.png)

Source: KBRA, Bloomberg, cbonds.com, SEC NPORT-P, HSF press releases, HarbourView and Influence Media press coverage. Estimated figures (sponsor equity, bilateral bank, private credit, warehouse, and unrated private placements) are spread-equivalent estimates based on publicly available averages rather than disclosed deal pricing. Data as of April 30, 2026. Underlying figures: [Google Sheet](https://docs.google.com/spreadsheets/d/1SvqaWE2IsIFqbtnu9OTj4zBcYYnAH-XT/edit).

**Chart data:**

| Financing Path | Spread | All-In Cost / Yield | Placement Type |
| :--- | :--- | :--- | :--- |
| Sponsor equity (target IRR) | ~+1,500–2,000 bp | ~12%+ (target IRR) | Sponsor |
| Syndicated bank credit (single-lender RCF / term loan) | +450–700 bp | SOFR+450–7.00% | Bilateral |
| Private credit / direct lending | +350–600 bp | SOFR+3.50–6.00% | Bilateral |
| Warehouse facility (term-to-securitization) | +250–400 bp | SOFR+2.50–4.00% | Bilateral |
| Hipgnosis Songs Fund (CNB-led RCF, pre-2023) | +175 bp | (KBRA proxy) | Bilateral |
| Concord Music Royalties 2022-1 Class A-2 | +340 bp | 6.50% coupon / +340 bp | Publicly rated (KBRA A+) |
| Privately placed unrated catalog notes (e.g. HarbourView, Influence Media) | +700–1,100 bp | SOFR+7.00–11.00% | Privately rated |
| Hipgnosis Music Assets 2022-1 | +310 bp | 5.00% coupon / +310 bp | Publicly rated (KBRA A−) |
| Kobalt Music Assets 2024-1 | +240 bp | 6.625% coupon / +240 bp | Publicly rated (KBRA A−) |
| Hipgnosis Songs Fund (CNB-led RCF, Oct 2022 refi) | +200–225 bp | SOFR+2.00–2.25% | Syndicated |
| Hi-Fi Music IP Issuer II 2022-1 | +210 bp | 3.939% coupon / +210 bp | Publicly rated (KBRA A) |
| Concord Music Royalties 2024-1 | +185 bp | 5.64% coupon / +185 bp | Publicly rated (KBRA A+) |
| Lyra Music Assets 2025-1 Class A-2 | +170 bp | 5.604% coupon / +170 bp | Publicly rated (KBRA A / Fitch A / S&P A) |
| Canon Music Issuer Trust 2026-1 | +160 bp | 5.56% coupon / +160 bp | Publicly rated (KBRA A / S&P A) |

A similar pattern has emerged with Chord Music Partners, the platform formed in partnership between Dundee Partners and Universal Music Group (UMG). Chord priced its Canon Music Issuer Trust 2026-1 in April 2026 at a 5.56% coupon and a 160 bp spread over swaps, the tightest pricing on record for the asset class at the time of closing. Chord applies the same rated ABS toolkit Concord and Recognition built to a structurally different model. Rather than an independent acquisition platform raising third-party capital, Chord is an off-balance-sheet vehicle built as a joint venture (JV) between a major label and a sophisticated capital partner, with Universal Music Investments serving as transaction manager and UMG providing administration, distribution, and operational support for the underlying catalog. Apollo structured the deal through Apollo Global Securities and Atlas SP Securities as joint bookrunners and Redding Ridge Asset Management as structuring agent, the same group that supports Concord's master trust. Apollo and its origination platforms have anchored nearly $5 billion in cumulative gross music ABS issuance since late 2022 across the Concord master trust series and Canon 2026-1. Through 2025, the rated music ABS record had been largely built on independent acquisition platforms. Chord is the first major label JV to reach the rated market, which shows the structure can work across different types of issuers. The pricing outcome matters as much as the structure, since 160 bps over swaps on inaugural execution indicates that the combination of major label operating infrastructure, sophisticated capital partnership, and the Apollo structuring constellation can clear at the tightest end of the rated record on a debut transaction rather than requiring multiple vintages to season into that range.

Producing those outcomes requires institutional infrastructure on a scale beyond what bilateral financing demands. Bilateral private credit facilities generally require quarterly borrowing-base certificates, lender-approved acquisition documentation, customary affirmative and negative covenants, monthly or quarterly servicing reports, and lender consent rights over material transactions. The scope and reporting cadence are materially narrower than rated execution requires. The additional infrastructure required for rated execution is what produces lower risk and a lower cost of capital. The useful question for a platform is whether its acquisition strategy, capital horizon, and end goal justify building the heavier stack now or whether bilateral or warehouse structures remain the better fit for its current stage.

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**See also:** `02 - Structure of Music ABS.md` (mechanics of how a rated music ABS is built) · `03 - The Five Drivers (overview).md` (the five readiness drivers that produce the above outcomes) · `Appendix - Transaction Record.md` (deal-by-deal record).
