What is a celebrity bond?

I came across the term "celebrity bond" in something I was reading. What are celebrity bonds and how do they work?

Hi there,

A celebrity bond is a debt instrument which is linked to the financial success of specific celebrities. In buying celebrity bonds, investors lend money for the financing of concerts, albums, movies, or other celebrity-linked merchandise. In exchange for their investment, investors obtain the right to collect a share of royalties. Whether or not investors earn yields on celebrity bonds depends on the performance of intellectual property sales.

Although celebrity bonds offer potentially high yields, they are a high risk investment because they are based on the performance of an individual or group of individuals and as such are prone to numerous hazards. For example, a band may fall apart or a celebrity might die or become disabled. Changes in social and technological trends can also affect royalties.

Best regards from Moneyguru

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