(Bloomberg) — Apollo Global Management Inc. and Blackstone Inc. have finalized a $35 billion financing package for Anthropic PBC to expand its AI infrastructure, marking the latest mega-deal in the artificial intelligence race.
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The debt deal priced across three tranches, according to people familiar with the matter. The capital will fund Google’s custom chips for Anthropic to lease, Bloomberg previously reported.
The package, one of the biggest private credit transactions in history, highlights the race by top-tier financiers to fund data center construction and the chips they use. Tech companies are tapping every corner of the credit markets to meet AI’s unprecedented capital demands, forcing Wall Street to engineer novel debt structures to keep pace.
Under the deal, Broadcom Inc. is backstopping payments on the largest senior portions of the debt. It was advised by Morgan Stanley, which helped arrange the transaction, the people said, asking not to be identified discussing private information. Roughly half of the $35 billion of debt was syndicated to other investors, according to the people.
Representatives for Apollo, Blackstone, Anthropic and Morgan Stanley declined to comment. Representatives for Broadcom didn’t immediately respond to requests for comment.
Chip Financing
The deal represents a milestone for the emerging chip-financing market — a sector projected to expand rapidly as a wave of new data centers creates sustained demand for specialized hardware. The transaction is expected to be the first of many for Broadcom, which is helping Google develop the tensor processing units, called TPUs.
On Broadcom’s earnings call this week, Chief Executive Officer Hock Tan said the company is creating what he called the AI XPV platform with Apollo, Blackstone and other leading investors to deploy more than 20 gigawatts of compute capacity through 2028. Apollo is launching the first tranche of this platform, he said.
“Our strategic vision is to bring together Broadcom’s leading technology and investor partners with the strongest balance sheets to deliver at scale sufficient compute capacity at the lowest cost and power for the leading AI frontier labs, including Anthropic and OpenAI,” he said.
The financing package comes on the heels of Anthropic’s confidential US IPO filing, as it attempts to beat rival OpenAI to a public market debut later this year. The Claude developer raised $65 billion in a funding round late last month that valued the firm at $965 billion including the new investment.
Deal Structure
In this type of financing structure, a special-purpose vehicle raises capital through a mix of debt and equity to purchase the chips, which are then leased to a customer. The debt is primarily backed by the resulting lease payments, along with the unknown long-term value of the chips.
In this case, the $35 billion debt facility was structured across three tranches. The senior layers — the $6 billion notes dubbed A1 and $24 billion of A2 notes — are backed by Broadcom, allowing the debt to secure lower borrowing costs aligned with Broadcom’s strong credit profile. The notes received private ratings in the mid-investment grade tier.
The A1 tranche was sold to a group of banks at a coupon of 1 percentage point over Treasuries, while the A2 notes priced at par with a 5.75% coupon, the people said. Buyers of the A2 tranche included institutional investors like Apollo’s Athene insurance arm, which favors high-quality debt to back its long-term liabilities.
The third tranche — $4.5 billion of B notes — doesn’t carry the Broadcom backing and sold with an 8.5% coupon at par, according to the people.
In addition to the debt, Apollo’s Atlas SP Partners’ structured-finance unit provided $800 million in equity, meaning it’s effectively the owner of the SPV, said the people.
Residual Support
A key feature of the deal is Broadcom providing a “residual value support” agreement. That means that if Anthropic fails to make the lease payments for a certain period of time, the SPV will sell the chips to pay back the debt investors. If the value of the chips doesn’t make the debt investors whole, then Broadcom will make up the shortfall for 100% of the value owed to the A1 and A2 investors.
This type of residual value feature has been used in another mega debt deal, though it financed the construction of a data center rather than chips. Meta Platforms Inc. provided a similar protection for the value of its Hyperion facility in Louisiana — a transaction that Morgan Stanley arranged. That allowed the so-called Beignet bonds to trade in line with Meta’s corporate debt.
–With assistance from Scott Carpenter and Silas Brown.
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