Chapter 54 ABS Asset-Backed Securities

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The acquaintance and lingering with Nicole Kidman is destined to be a fruitless dream. The next day, after storing this memory in a corner of his heart, Guo Shouyun, who had returned to his normal life, put on his suit and leather shoes, took the documents prepared in advance, and drove to Merrill Lynch's office in Los Angeles.

As one of the world's top five investment banks with a strong reputation, Merrill Lynch is the largest underwriter of securities and equities on Wall Street, with a financial marketing team that surpasses all investment banks in the world. And this is one of the reasons why Guo Shouyun looked at Meilin and chose it.

Of course, as the third leader of the five major investment banks on Wall Street, Merrill Lynch's office in Los Angeles is not bad at all. In the pyramidal fashion, the tallest building in Los Angeles, the Pan American Tower, occupies an entire floor. The interior is also full of various tall and tall ceilings. However, it is also necessary for the development of the company. Investment banks are faced with CEOs of large companies and billionaires with assets of more than 10 million or hundreds of millions. If your office space is too shabby, who will talk to you about business?

Through the front desk, Guo Shouyun was introduced to Merrill Lynch's reception room. After a short time, a middle-aged white man in a black suit, slightly bald, and gold-rimmed glasses pushed the door and walked in.

Guo Shouyun, who had already known the information, recognized at a glance that the other party was Danny Lewis, the head of Merrill Lynch's office in Los Angeles, who he wanted to see today!

"Mr. Guo, welcome!"

"Thank you!"

After taking the initiative to reach out and hold Guo Shouyun's right hand, Danny Lewis smiled while looking at the calm and confident young man in front of him: "I didn't expect that the well-known writers who wrote famous novels such as "Pirates of the Caribbean", "Fantastic Beasts and Where to Find Them", and "Fifty Shades of Grey" would be so young... That's right, Mr. Guo. You'll be sure to leave me a signature later. I'm a big fan of your books, and I especially love Pirates of the Caribbean!"

Looking at Danny Lewis with a smile in front of him. Regardless of whether what the other party said is true or not, at least hearing what Guo Shouyun said just now will make him feel very comfortable. After all, no one doesn't like to hear good things.

"Thank you, Mr. Lewis, of course signing is not a problem!"

"That's good!

Guo Shouyun nodded and sat down on the sofa on the side.

"What business does Mr. Guo want to handle through our Merrill Lynch?"

Americans don't have as many twists and turns as the Chinese business community, so they go straight to the ground when they come up.

"Please take a look at these materials first!"

Guo Shouyun opened his briefcase, took out a document bag from it and handed it over.

After taking it, Danny Lewis quickly took out the documents inside. After looking at it twice, his eyes lit up, and his attention instantly became highly concentrated.

"I didn't expect Mr. Guo's novel to be so popular in the market!"

After reading it, Danny Lewis looked at the young man in front of him, his tone was slightly surprised, and at the same time, his eyes revealed a hint of essence.

Guo Shouyun smiled faintly.

"Mr. Lewis is holding all legally valid documents issued by the Thorn Bird Publishing Company. The sales figures for each of these books are real and reliable!"

"We believe in the authenticity and validity of these documents. But I'm more curious about what Mr. Guo wants to do with Merrill Lynch when he brings them?" Danny Lewis said, nodding.

"It's actually very simple, I'm sure Mr. Lewis has already guessed it!" After a pause, Guo Shouyun stared at the other party and said in a deep voice, "I hope to use all the copyright and derivative proceeds of these 5 sets of books in the next ten years to issue $350 million worth of ABS-backed securities through Merrill Lynch!"

"$350 million!"

Danny Lewis frowned slightly. Guo Shouyun plans to issue ABS securities with the future proceeds of several books, which he is not surprised to do.

In early 1998, American rock star David Powe completed an asset securitization transaction. The basis of the deal is the publishing rights and recording rights to 300 songs that David Bowie wrote during his acting career. The asset-backed securities are rated A3 by Moody's and raise $55 million, yielding 7.95%. At the same time, this ABS asset securitization also opens a precedent for similar asset securitization by artists, writers, and owners who own copyrights or can generate royalty income.

But in Danny Lewis's view, $350 million is a bit high.

"This is the financial data of my 5 sets (volumes) of books since they were listed!" Guo Shouyun took out a document again and handed it over.

"The Pirates of the Caribbean trilogy has sold 1.94 million units so far in its eight weeks on the market, and at a $45 price, it has generated $87.3 million. The Fifty Shades of Grey trilogy has sold 2.86 million units so far in its eight weeks on the market, and is still growing at a rate of nearly 350,000 units per week, generating $187.28 million based on its total pricing of $48. Fantastic Beasts and Where to Find Them has been on sale for eight weeks and has sold 4.25 million copies so far, generating $85 million based on its $20 pricing. The Declaration of Independence, the first in the National Treasure series, has been on the market for six weeks and has sold 2.33 million copies, and at its $16 price, it is currently generating $37.28 million in revenue. "Smart: Ghost Story" has sold 890,000 copies in its three-week game, and has already generated $8.9 million in revenue at its $10 price. ”

"Combined, these five sets of books have generated a total revenue of $406 million based on current sales performance. As an author, I can get 15% of the copyright share, which is $60.864 million! After deducting 35% of the highest level of federal personal income tax and 4.92% of the state tax, I will end up with $36.519 million! Now I use the proceeds of 5 sets (volumes) of books to issue a fixed-rate ABS asset-backed security worth $350 million with an annual yield of 6.48%, which should not be an excessive request!"

"Mr. Guo, I admit that your book is indeed a bestseller. The long-tail effect of books is also exciting enough, but our concern is: after five or six years, the craze has subsided, how are you going to repay the loans of investors?"

"Why should Mr. Lewis knowingly ask, that the royalty income from the novel is only one part of all the income from the whole work. The profits brought by subsequent film and television adaptations and peripheral product sales far exceed a single copyright income. Guo Shouyun said calmly.

"Sorry, all we can see now is your royalties, so we can only talk on that basis. As for the film and television adaptation of the novel and the sales revenue of peripheral products, the lack of sufficient financial data and convincing survey results cannot be used as a guarantee for your issuance of ABS asset-backed securities!" As soon as the words fell, Danny Lewis glanced at Guo Shouyun, whose expression had not changed much, and frowned slightly, the other party's calmness that did not meet his age made him a little unsure whether to say the latter words.

However, for the sake of profit, Lewis only hesitated briefly before speaking.

“… Unless Mr. Kwok is willing to accept a higher interest rate, it will be difficult for your bond to be accepted by investors in the secondary market. ”

The United States is different from Europe and China in that its capital market is larger than the stock market. That is to say, many enterprises and institutions that need funds, when raising funds, are more likely to raise funds through the issuance of fixed-income or floating-income bonds by securities companies, rather than entering the stock market. Just like Guo Shouyun, he needs funds now, so he took out the future proceeds of his novel as collateral to issue an ABS asset-backed bond, borrowing a sum of money from the market first.

Of course, there is also a saying about borrowing money, and the yield of 6.48% is 50 basis points higher than the current yield on 10-year US Treasury bonds. What's more, Guo Shouyun is using the future proceeds of his work as collateral, and the risk of this bond is not very high in terms of the sales of his novels.

But if the yield, that is, the interest, can be higher, when the bond is sold on the secondary market. Under the high rating, it will undoubtedly be favored by more investment institutions. As a middleman in bond sales, it is also easier for Merrill Lynch to get its own commissions.

Even, in the future, if Guo Shouyun's 5 sets (volumes) of novels develop well and the income is amazing. Merrill Lynch can also sell it at a higher price, which will get a higher profit.

"Mr. Liunis, what is the rate of return you hope for this batch of bonds?" After glancing at the other party, Guo Shouyun said indifferently.

"Like 8%!"

Danny Lewis said with a twinkle in his eyes.

"8%?" Guo Shouyun smiled coldly and slowly stood up, "Maybe I should go to Morgan Stanley or Goldman Sachs!"

When the words fell, looking at Lewis, who was still smiling, as if he was not worried about him leaving, Guo Shouyun did not hesitate to pack up his materials and put them in his briefcase. Although Merrill Lynch was his first choice, it was not his only choice. There are five major investment banks on Wall Street, and there are even more tens of thousands of commercial banks with securities investment business. Even if he gets rid of those who are weak, Guo Shouyun has no shortage of options.

"Mr. Lewis, excuse me! I hope we have more opportunities to work together in the future!"

After speaking, without waiting for the other party to reply, he left the sofa with firm steps and pushed open the glass door of the conference room. But just as he was about to step out, Lewis's voice came from behind him.

"Mr. Guo, please wait a minute!"

Guo Shouyun's figure stopped, turned around and looked directly at Danny Lewis and said: "With a return rate of 6.48%, if Merrill Lynch wants to add more, then we don't need to continue to waste time!"

The determination in his tone made Danny Lewis's brow furrow slightly. Regardless of whether the 6.48 percent yield is justified, he can't let the $350 million worth of bonds slip out of his hands now.

"Mr. Guo, before agreeing to your conditions, we need to do an overall risk assessment of your five sets of books!"

"Yes, but what about the time, it's too long, I won't wait for you!" Guo Shouyun nodded.

"A week! We'll get back to you in a week. But before you can do that, you must first sign an exclusivity agreement with us. You can't introduce this business to other securities institutions and individual investors until the results are out!"

After a little consideration, Guo Shouyun said again: "I can sign an exclusive agreement with you, but the time is only three days. If, with Merrill Lynch's strength, the risk assessment cannot be completed in three days, then I may really consider the need to cooperate with you. ”

Danny Lewis frowned slightly. He was good at observing words and feelings, and he could see that the young man in front of him was not talking about conditions, but intended to do so. If he refuses, the other party may really not hesitate to look for Goldman Sachs or Morgan. As a peer, this is clearly not what he wants to see.

In addition, with years of financial experience, coupled with the financial documents and sales data provided by Guo Shouyun, Danny Lewis instinctively felt that this was a big deal, so he was not willing to give up. The yield of 6.48% is not low either.

Of course, three days is a tight timeline, and the risk assessment is not always complete. But having these three days is always a buffer. Thinking of this, he nodded.

"On behalf of Merrill Lynch, I agree to Mr. Guo's conditions!"

Guo Shouyun nodded, and sighed slightly in his heart. Although we haven't seen the final results yet, at least the start has been smooth.