Music rights are increasingly ending up on the bond market: KBRA has rated $12.9 billion of issuance since 2020
Music catalogs, once primarily the subject of negotiations between record companies, publishers and authors, are increasingly being transformed into financial assets used as the basis for issuing bonds. The credit rating agency KBRA announced on May 14, 2026, that since 2020 it has assigned 81 ratings to securities backed by music royalties, with a total value of approximately $12.9 billion. This is a segment of the market known as music royalty ABS, or asset-backed securities, in which future income from music rights is used as collateral for borrowing.
According to KBRA's report, music ABS issuances rated by the agency exceeded $3.3 billion in both 2024 and 2025. However, for 2026 KBRA expects issuance to fall by approximately 25 percent, to just over $2.5 billion. The main reason cited is the continued consolidation among owners and managers of music catalogs, which could reduce the number of standalone transactions, while at the same time strengthening larger platforms that manage broader portfolios of rights.
The model is not new. Back in 1997, David Bowie attracted market attention when he used future income from his catalog to issue bonds worth $55 million. At the time, such a structure was unusual and was regarded as a financial curiosity, but almost three decades later music rights are increasingly viewed as a predictable source of income, especially in an environment in which streaming, licensing and global music consumption generate regular cash flows.
How bonds backed by music royalties work
In music ABS transactions, investors do not necessarily buy the copyrights or neighboring rights themselves, but securities whose repayment relies on the income generated by those rights. That income can come from streaming, physical sales, digital downloads, radio and television broadcasting, public performance, synchronization in films, series, advertisements and video games, and other forms of commercial use of music. In practice, a catalog of songs or recordings becomes a source of cash flow from which debt to investors is serviced.
In an earlier report on this asset class, KBRA emphasized that music royalty ABS requires complex infrastructure. It is necessary to monitor and protect intellectual property, collect royalties from multiple territories and channels, maintain interest in catalogs, and properly distribute income to rights holders. Unlike more homogeneous types of collateral, music intellectual property cannot be assessed using a single formula, because the value of an individual catalog changes depending on the popularity of works, the age of the repertoire, contracts, the markets in which income is generated, and the type of rights included in the transaction.
Such a structure is attractive to catalog owners because it enables capital raising without necessarily selling the entire asset. The rights owner can monetize part of expected future income in advance, while at the same time retaining control over the catalog or part of the business. For investors, the appeal lies in the fact that income from well-known musical works can behave differently from traditional corporate income, real estate markets or consumer credit. That is precisely why KBRA, in its latest report, highlights demand for recurring cash flows and the institutionalization of music rights as one of the reasons for the sector's expansion.
The market has grown, but 2026 brings a more cautious forecast
According to KBRA data, the number of issuers in this segment increased from nine in 2023 to 18 unique issuers in 2026. The agency assesses that a broader issuer base provides a more stable foundation for the long-term development of the market, because the sector no longer depends only on a small number of repeated transactions. At the same time, annual issuance volume remains variable, which is expected for a relatively young and specialized part of structured finance.
KBRA states that debt service coverage ratios, known as DSCRs, in the transactions it monitors have generally remained stable, although there are weaker points connected with individual catalogs and structures. The agency expects continued rating stability in the sector, but warns that average DSCR is decreasing primarily because of refinancing conditions and lower initial ratios in some newer issuances. In other words, the market is expanding, but investors increasingly have to distinguish the quality of the catalogs themselves, the legal structure and the manager's ability to maintain income.
The announced contraction of issuance in 2026 does not necessarily mean a decline in the value of music rights. KBRA explicitly linked the expected reduction to issuer consolidation. If larger owners acquire smaller platforms or if a catalog moves under an investment-stronger corporate structure, the need to issue separate ABS instruments may decrease. On the other hand, larger portfolios can bring better diversification, more efficient collection and more professional rights management, which can be positive for the credit profile of such transactions.
Consolidation is changing the ownership map of music rights
Music Business Worldwide, citing KBRA's report and publicly available announcements, lists several transactions that illustrate the broader wave of consolidation. BMG and Concord confirmed on April 28, 2026, a merger in which Bertelsmann remains the majority owner of the combined company. In July 2025, Concord closed an ABS transaction worth $1.765 billion, described as the largest and longest-structured securitization of music rights up to that point.
In the same context, Primary Wave Music is also mentioned; in March 2026 it announced a definitive agreement to acquire Kobalt from Francisco Partners, with the transaction expected to close in the third quarter of 2026. In 2024, Kobalt carried out its first ABS transaction, worth $266.5 million, secured by a publishing catalog with more than 5,000 works. Such examples show how catalogs that previously could have served as the basis for standalone borrowing are increasingly being included in larger platforms.
Particular attention was also drawn by the announcement that Sony Music Publishing confirmed on May 11, 2026, an agreement to acquire the entire catalog of Recognition Music Group, previously connected with Hipgnosis, from Blackstone. According to a Music Business Worldwide report, Bloomberg estimated the value of the transaction at between $3.5 billion and $4 billion. Blackstone had previously carried out two ABS transactions with a total value of $1.842 billion related to that asset, and the transfer of the catalog under Sony could mean that such issuances will no longer appear on the market as separate music ABS products.
KBRA states that since the beginning of 2025, four transactions it rated have included issuer acquisitions, manager changes or publicly announced possible acquisitions. The agency describes that level of activity as the highest since this asset class re-emerged more strongly in 2020. This points to a market in which financial instruments and ownership transactions are no longer separate processes, but directly shape one another.
Streaming is the key basis for income predictability
The growing interest in music ABS instruments cannot be understood without the change in the way the music industry earns money. According to IFPI data from the Global Music Report 2026, global recorded music revenues grew by 6.4 percent in 2025 and reached $31.7 billion, the eleventh consecutive year of growth. IFPI states that streaming remains the main driver of the market: total streaming revenues exceeded $22 billion and accounted for 69.6 percent of global recorded music revenues.
Paid streaming is especially important for financial models because it brings more regular and predictable income than the former sales cycles of physical sound carriers. IFPI announced that in 2025 there were 837 million users of paid streaming subscriptions worldwide and that revenues from paid subscription streaming grew by 8.8 percent. For investors in bonds backed by music royalties, such data help assess future cash flows, although they do not eliminate risks connected with changes in consumer habits, platform algorithms, licensing agreements and potential streaming manipulation.
The U.S. market further shows the scale of the change. According to the RIAA, recorded music revenues in the U.S. reached a record $11.5 billion in 2025, and streaming accounted for 82 percent of total revenues for the fifth consecutive year. The RIAA states that the number of paid streaming accounts in the U.S. reached 106.5 million, with related revenues of $6.4 billion. Since the U.S. is the largest individual music market and an important source of income for many catalogs, these indicators are important for assessing credit quality in ABS transactions.
Risks remain hidden in the details of catalogs
Although music rights are often described as stable assets, the income of an individual catalog can deviate significantly from the market average. A catalog with a large share of evergreen songs, broad international consumption and diverse sources of income behaves differently from a catalog that depends on a small number of newer hits or on one performer. The age of the repertoire, genre, territorial distribution, share of income from streaming, synchronization and performance rights, and contractual limitations can significantly affect the amount and stability of royalties.
KBRA has already warned in earlier analyses that valuation assessments and legal due diligence in the music sector are specific to each transaction. This means that it is not enough to look only at the total value of a catalog or the fame of the performer. It is important to determine who actually owns which rights, whether there are pledges or restrictions, how income is collected, which organizations collectively administer rights, and how reliable historical revenue data are.
An additional challenge arises from changes within the music industry itself. IFPI warns of the growing threat of streaming fraud, in which artificially generated listens can redirect income away from legitimate authors and rights holders. At the same time, new issues are developing in connection with artificial intelligence, content licensing and the use of protected music in the training or operation of new tools. For ABS investors, these are not only cultural or copyright issues, but also factors that can affect long-term income from collateral.
What the growth of music ABS issuance means for authors and the industry
The financialization of music rights can bring capital to publishers, record companies, funds and other catalog owners, but at the same time it changes the way the value of music is assessed and distributed. When a catalog is used as collateral, its management becomes directed not only toward cultural relevance and the long-term development of authors, but also toward income stability, collection predictability and protection of the credit profile. This can encourage more professional rights management, but also increase pressure for catalogs to be used in a more commercially efficient way.
For authors and performers, the effects depend on contracts and ownership structure. If an author retains a share in the rights or participates in income, better catalog management can increase payments. If the rights have already been sold or transferred, changes in ownership and financial structure may have limited direct effect on the author, but they may affect the way music is licensed, promoted and placed. That is why contract transparency, clear collection rules and precise rights registration are an increasingly important part of the music economy.
For the broader market, KBRA's data show that music ABS is no longer a marginal phenomenon. A total of $12.9 billion of rated issuance since 2020 indicates that investors have accepted music royalties as a relevant form of collateral. Still, the announced decline in issuance in 2026 shows that the market is entering a more mature phase, in which growth will not depend only on an increasing number of transactions, but on catalog quality, ownership consolidation, streaming stability and the industry's ability to protect income from legal, technological and market disruptions.
Sources:
- KBRA – report “Playback: Issuance, Industry, and Performance Trends in Music ABS” with data on $12.9 billion of issuance, 81 ratings and the forecast for 2026 (link)
- Music Business Worldwide – analysis of consolidation and transactions connected with the music ABS market (link)
- IFPI – Global Music Report 2026, data on global recorded music revenues and streaming in 2025 (link)
- RIAA – report on U.S. recorded music industry revenues in 2025 (link)
- Business Wire / KBRA – earlier report “Music Royalty ABS: The Beat Goes On” on the structure, risks and credit characteristics of music royalty ABS transactions (link)