Anthropic offers Blackstone chip financing yield above 10%

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Anthropic Blackstone chip financing

Highlights

Blackstone funds will invest $9 billion in debt backed by Anthropic's five-year chip leases, receiving a 10% coupon plus new-issue discounts and fees.
Anthropic's $18 billion chip financing, including $9 billion to be sold to broader investors at lower yields, represents the largest AI chip financing to date and tests investor appetite for AI-linked debt.
KBRA rated Anthropic’s junior debt one notch below investment grade, while the $42 billion of senior debt guaranteed by Broadcom could become tradable in the 144A market after 2027.

Debt package tests appetite for AI financing

As first reported by the Financial Times, the financing, known as Project North Star, is designed to help Anthropic fund the procurement of about 1.5 gigawatts of custom semiconductors developed by Google, known as tensor processing units.

The package is expected to be the largest chip financing to date and is emerging as a key test of investor demand for AI-linked debt as lenders grow more cautious about heavy capital spending and borrowing across the technology sector.

According to people familiar with the matter, Blackstone funds would invest $9 billion in debt backed by Anthropic's five-year lease payments on the chips, representing about half of the $18 billion junior loan portion. Blackstone was offered a 10% coupon, with the total return rising further after new-issue discounts and other fees are included.

The remaining $9 billion is expected to be sold to a broader investor group in the coming months, potentially at a lower yield. By comparison, a borrower with a similar credit profile typically pays about 7% in the public bond market, based on the ICE BofA BB U.S. High Yield Index.

Higher costs complicate investment-grade ambitions

Anthropic sold about $4.4 billion of debt only four months ago in a similar transaction called Project Big Sky, carrying an interest rate of 8.5%. The latest terms indicate investors are demanding higher risk premiums to finance the rapid AI build-out, while technology groups are accepting steeper costs to secure large commitments and anchor backers.

The transaction also highlights the challenge for the five-year-old company as it works toward an investment-grade rating. Blackstone told its investment partners that the new chip deal offers a rare chance to earn high yield on Anthropic-linked debt because the company is expected to gain an investment-grade rating and sharply reduce borrowing costs after a public listing, the people said.

KBRA assigned Anthropic a rating one notch below investment grade in June, and the latest junior debt is expected to receive a similar assessment. The broader debt package also includes about $42 billion of senior debt guaranteed by Broadcom, which helps develop the chips with Google, and the debt could become tradable in the institutional 144A bond market once the capital is drawn down in 2027.

Our earlier analysis of the S&P 500 sell-off highlighted how weakness in technology and semiconductor stocks was fueled by concerns about the durability of AI-related investment and the impact of higher borrowing costs. We noted that rising Treasury yields and a hotter inflation print amplified volatility, pushing the index below key short-term moving averages and keeping traders focused on nearby support and resistance levels.

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