Skip to content
Subscriber Only

Care to Buy Some David Bowie Bonds?

In Europe, securitization is the hottest way to raise cash

Rock star David Bowie did it. Madame Tussaud's wax museum has done it, too, and so have hospitals, credit-card issuers, and the folks that bring you the World Cup. What is it? Securitization. That's a way of hedging financial bets--and raising fast money--by bundling assets and selling bonds backed by current and future revenue from those assets. Once a financial strategy pretty much confined to the New World, it has caught on big-time in the Old. Europe in the past few years has become a hotbed of securitization, as companies from London to Rome look for innovative ways to tap the financial markets.

Indeed, securitization has never been more popular, as banks become increasingly skittish about lending money in today's volatile capital markets. On Feb. 12, British property developer Canary Wharf Group PLC issued $1.8 billion in bonds backed by rental income from the company's portfolio of office blocks--including four buildings still under construction--in London's Docklands. It's the fifth time in as many years that Canary Wharf has tapped the securitization market, raising a total of $5 billion. The proceeds have gone to fund development, repay construction loans, and even return cash to shareholders. "Securitization lets us more effectively manage our balance sheet," says Canary Wharf's managing director of finance, Peter Anderson. "There's also a substantial pricing advantage."