Anthropic offers Blackstone double-digit yield in latest chip financing

Anthropic is offering Blackstone a high yield of more than 10 per cent to finance its latest chip deal, highlighting the start-up’s willingness to stomach steep borrowing costs to finance expensive AI infrastructure.

The $60bn debt package, dubbed “Project North Star”, would help fund Anthropic’s procurement of about 1.5 gigawatts of custom semiconductors developed by Google, known as tensor processing units.

It is expected to be the largest chip financing to date and a crucial test of investor appetite in AI debt at a time when lenders are increasingly nervous about tech companies’ heavy capital spending and borrowing.

Blackstone funds would invest $9bn in the debt backed by Anthropic’s five-year lease payments on the chips, accounting for about half of the $18bn junior loans, according to people familiar with the matter.

The private capital giant was offered a coupon of 10 per cent and an even higher total return after accounting for new-issue discounts and other fees, the people said. A borrower with a similar credit profile typically pays a yield of about 7 per cent in the public bond market, according to the ICE BofA BB US High Yield Index. The rest of the $9bn would be sold to a broader group of investors in the coming months, potentially with a lower yield, the people added.

Blackstone declined to comment. Anthropic did not immediately respond to a request for comment.

Just four months ago Anthropic sold about $4.4bn of debt in a similar deal known as “Project Big Sky” at an interest rate of 8.5 per cent, the FT reported at the time.

The rise in borrowing costs underscores investors’ demand for higher risk premiums to finance the AI build-out, as they grapple with tech companies’ huge funding needs over a short period of time. Tech groups are also paying up to secure capital in mega-sized financings in order to attract anchor investors and early commitments.

It also highlights the challenges facing the five-year-old AI lab as it aims to obtain an investment-grade rating. Blackstone told its investment partners that the latest chip deal would be a rare opportunity to earn high yield on Anthropic-linked debt, as it is expected to receive an investment-grade rating and vastly lower its borrowing costs once going public, the people added.

Anthropic was assigned a one-notch-below-investment-grade rating by KBRA in June, and the latest junior debt is expected to receive something similar.

The new debt package also includes about $42bn of senior debt guaranteed by Broadcom, which helps develop the chips with Google. When the capital has been drawn down in 2027, the debt could become tradeable in the institutional 144A bond market.