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Wall Street banks on Monday began shedding part of a new $60 billion debt program to finance Anthropic’s lease of Google semiconductors, the largest chip financing deal to date as tech companies race to secure AI computing power.
Bank of America, Citigroup and Morgan Stanley, which have committed to financing the operation, have contacted other banks to buy back part of the debt, according to sources familiar with the matter.
The funding, secured by Broadcom, is seen as an indicator of the appetite for AI-related debt. In recent months, investors have demanded a higher risk premium to lend to technology companies that are investing billions of dollars in developing sophisticated AI models, fueled by fears that their heavy capital investments will not translate into profitable businesses in the long term.
Much of the borrowing spree will be used to finance the purchase of advanced chips that are becoming more expensive by the day. The latest financing package follows Broadcom’s $35 billion deal with Apollo and Blackstone a few months ago, when the chipmaker announced a massive 20-gigawatt “AI XPV” platform to help companies like Anthropic and OpenAI acquire computing capabilities.
Broadcom is developing so-called tensor processing units with Google to counter Nvidia’s dominance in the space.
The new debt will be partially guaranteed by Broadcom to help Anthropic reduce borrowing costs. Proceeds are earmarked for Anthropic’s chip orders in 2027, and lease payments will begin after the chips are delivered.
About $42 billion in senior secured loans backed by Broadcom began bank syndication Monday and could be sold to a broader investor base in private placements or into the investment-grade bond market in the future thanks to Broadcom’s A-minus credit rating, the sources said.
An additional $18 billion of Broadcom unsecured junior debt is expected to be floated by the same banks at a later date, with Blackstone already committing funds for about $9 billion of the junior tranche and participating in the syndication of the remainder of the debt, the sources added.
Since lenders will be exposed to anthropogenic credit risks under junior debt, banks may prefer to tap the market after its IPO later this year so potential investors can access its financial information, one of the sources said.
Anthropic could also issue up to $42 billion in convertible securities to Broadcom to pay rents, according to Broadcom’s latest quarterly report. The use of convertible notes was also included in a list of conditions presented to investors, a second person said.
Bank of America, Citigroup and Morgan Stanley, which are joint bookrunners on the deal, declined to comment. Blackstone declined to comment. Bloomberg previously reported on aspects of the transaction.
Additional reporting by Ryan McMorrow in San Francisco
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