Wall Street banks launch record $60bn chip deal for Broadcom and Anthropic

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.

Much of the borrowing spree will fund the procurement of advanced chips that are getting more expensive by the day. 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 OpenAI acquire computing capacity.

Broadcom is developing the so-called tensor processing units with Google to counter Nvidia’s dominance in the space.

The new debt will be partially backstopped by Broadcom to help Anthropic lower borrowing costs. The proceeds are earmarked for Anthropic’s chip orders in 2027, and the lease payments will begin after the chips are delivered.

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, the people said.

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 and participating in the syndication of the remainder of the debt, the people added.

Since lenders will be exposed to Anthropic credit risks in the junior debt, banks might prefer tapping the market after its IPO later this year so would-be investors can access its financial disclosures, one of the people said.

Anthropic could also issue up to $42bn of convertible notes to Broadcom to pay the leases, according to Broadcom’s latest quarterly report. The use of convertible notes was also included in a term sheet shown 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 earlier reported on some aspects of the transaction.

Additional reporting by Ryan McMorrow in San Francisco