Wall Street banks on Monday began offloading part of a new $60bn debt package to fund 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 fund the deal, have reached out to other banks to purchase portions of the debt, according to people familiar with the matter. The financing, guaranteed by Broadcom, is seen as a bellwether for appetite in AI debt. Investors in recent months have demanded a higher risk premium to lend to tech companies pouring trillions of dollars into developing sophisticated AI models, fuelled by concerns that their heavy capital investments might not translate into profitable businesses in the long run.
The latest financing package follows Broadcom’s $35bn deal with Apollo and Blackstone just a few months ago, when the chipmaker announced a massive 20-gigawatt “AI XPV” platform to help the likes of Anthropic and Open AI acquire computing capacity. Broadcom is developing the so-called tensor processing units with Google to counter Nvidia’s dominance in the space.
About $42bn of senior secured loans supported by Broadcom began bank syndication on Monday and could be sold to a broader base of investors in the private placement or investment-grade bond market in the future thanks to Broadcom’s A-minus credit rating. An additional $18bn of junior debt without Broadcom guarantees is expected to launch by the same banks at a later date, with Blackstone already committing funds to about $9bn of the junior tranche.
Anthropic could also issue up to $42bn of convertible notes to Broadcom to pay the leases. Bank of America, Citigroup and Morgan Stanley, which are joint bookrunners on the deal, declined to comment. Bloomberg earlier reported on some aspects of the transaction.
Source: Financial Times Companies · Summarized by HeadlinesBriefing