Yahoo Finance Sotheby’s Rare Bond to Be Backed by Rembrandt, Warhol Art
(Bloomberg) -- Loans tied to art from Rembrandt van Rijn and Andy Warhol are among the assets being bundled into an unusual $500 million bond from Sotheby’s Financial Services, according to people with knowledge of the matter.
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Barclays Plc is in the process of marketing the asset-backed security — which packages 89 personal loans given to art collectors — and expects to price it by next week. The top five painters whose art will ultimately back the debt also include Pablo Picasso, Jean-Michel Basquiat and Frida Kahlo, the people said, asking not to be identified as the details are private.
The total value of the art and other collectibles, which can include luxury items, is estimated to be about $2.85 billion, they said.
Representatives for Sotheby’s and Barclays declined to comment.
Contemporary art makes up 43% of the aggregate estimated value, the people said. A fifth comes from Old Master paintings, which Sotheby’s refers to as work by European artists from the late-13th to early-19th centuries.
Morningstar DBRS is rating the bonds and is expected to assign the top rating of AAA to the largest portion, according to a statement. Sotheby’s Financial Services has extensive experience in art lending, according to Morningstar DBRS, which noted that Sotheby’s hosts more than 500 auctions annually.
The auction house started talking to investors about this deal more than a year ago. With markets now more receptive to securitizations, issuers are pursuing niche types of offerings, such as fiber-backed bonds. ABS issuance is up about 45% year-over-year, according to data compiled by Bloomberg.
Read more: Sotheby’s Plans $500 Million Bond Secured by Art, Collectibles
Sotheby’s was established in 1744 and provides financing to clients. All of their loans are secured by art and collectibles — including fine art, decorative art, jewelry, collectible cars — and are usually in the form of term loans or short-term advances against a client’s consignments with Sotheby’s. Billionaire Patrick Drahi bought the auction house in 2019, ending its three decades as a public company.
--With assistance from Charles Williams.
(Updates to add that collectibles include collective cars in the last paragraph.)
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