Anthropic offers Blackstone over 10% yield for $60B chip-financing deal
What's the story
Anthropic, an artificial intelligence (AI) research company, is offering Blackstone a yield of more than 10% to finance a $60 billion chip-financing deal. The Financial Times reported that the deal is the largest of its kind to date. Dubbed Project North Star, the financing will help Anthropic acquire some 1.5 gigawatts of Google's custom tensor processing units (TPUs), amid fierce competition among AI developers for computing capacity.
Investment details
Funds managed by Blackstone to invest $9 billion
Funds managed by Blackstone are set to invest $9 billion in junior debt, backed by Anthropic's five-year chip lease payments. This is half of the planned $18 billion junior financing.
The investment firm has been offered a 10% coupon, with total returns exceeding that level after accounting for issuance discounts and fees.
This is significantly higher than the yields of around 7% typically paid by similarly rated borrowers in public bond markets.
Future plans
Remaining $9 billion to be offered to other investors
The remaining $9 billion in junior debt is expected to be offered to other investors in the coming months, possibly at lower yields.
The financing package also includes some $42 billion in senior debt backed by Broadcom, which works with Google on chip development.
This deal comes just four months after Anthropic's Project Big Sky financing, where it raised some $4.4 billion at an 8.5% interest rate.
Credit status
New junior debt likely to receive similar rating
In June, KBRA assigned Anthropic a credit rating one notch below investment grade. The new junior debt is likely to receive a similar rating.
The company is working toward achieving investment-grade status to reduce future borrowing costs.
The debt could become tradable in the institutional 144A bond market after it has been drawn down in 2027.
IPO discussions
NYC Comptroller urges Anthropic to delay IPO
Earlier this week, Anthropic opened a line of communication with New York City Comptroller Mark Levine after his letter urging the AI lab to delay its initial public offering (IPO).
Levine said he couldn't characterize the discussions with Anthropic. His letter urged the company to pause its listing process until it fully and transparently addresses raised AI safety and governance concerns.