Gloria Vanderbilt has put together a bond deal worth $30 million, market sources told Reuters.
New York-based investment banking boutique Universal Credit Corp. put the deal together, according to sources, who added that the issue is being shopped around to investors that specialize in these unique transactions, including insurance companies, Reuters reported.
Using financial techniques that are widely practiced by U.S. mortgage banks with pools of residential home loans, Vanderbilt bundled all of its earnings from trademarks and licensing agreements to create the $30 million bond, the sources told Reuters.
Mortgage banks resell their mortgage loans as bonds and the monthly payments made by homeowners are then paid out to bond holders. Vanderbilt’s deal will offer bondholders regular fees generated from its licensing and trademark income for apparel, shoes and handbags, and other fashion accessories such as jewelry.
The practice of promising regular income for an upfront payment to create a bond has also been used to create music royalty bonds.
Vanderbilt is not the first fashion house to enter Wall Street’s showroom with a bond backed by trademarks.
Bill Blass sold its trademark and licensing agreement to create a bond two years ago. The proceeds of that deal — also assembled by Universal Credit Corp. — were used to engineer a management buyout at Bill Blass.
Sources told Reuters that the Vanderbilt deal is an investment grade security that is being sold as a private placement. Sources said the issue has an average life of 4-1/2 years and it is being shopped at around 3.60 percentage points over comparable U.S. Treasuries.
Bankers are expected to sell the deal at 3.60 percentage points over a yield of between two-year and five-year Treasuries, which have yields of 2.50% and 3.51%, respectively.
By comparison, BBB-rated debt with a 10-year life from supermarket chains typically offers investors about 1.68 percentage points over comparable Treasuries, while a telecommunications business with BBB-rated, 10-year debt offers investors about 2.55 percentage points over comparable Treasuries.