Apollo, Blackstone Fund Anthropic AI Chips with $35B

In a significant move underscoring the insatiable demand for artificial intelligence infrastructure, Apollo Global Management and Blackstone have finalized a monumental $35 billion private credit facility. This substantial financing package is earmarked to bolster Anthropic's computational capabilities, specifically enabling the AI firm to acquire and deploy advanced custom chips essential for training its cutting-edge models.

The complex transaction, arranged with the assistance of Morgan Stanley, sees Broadcom playing a crucial backstop role for the senior tranches of the debt. This strategic involvement from the semiconductor giant highlights the growing convergence between hardware providers and financial institutions in the AI ecosystem. Approximately half of the total facility was syndicated to a broader group of institutional investors, demonstrating widespread confidence in the venture.

This deal represents a landmark achievement in the rapidly expanding private credit market for specialized hardware financing. Industry projections indicate a sharp upward trajectory for this sector, driven by the relentless expansion of data centers and the escalating need for bespoke computing power. The structure involves a special-purpose vehicle, established by Apollo's Atlas SP Partners, which will purchase the chips and subsequently lease them to Anthropic. Lease payments are the primary mechanism for servicing the debt.

The financing is segmented into three distinct tranches. The two senior layers, totaling $6 billion (A1 notes) and $24 billion (A2 notes), benefit from Broadcom's guarantee. This backing not only secures more favorable borrowing costs, reflecting Broadcom's robust credit standing, but also positions these notes within the mid-investment-grade rating spectrum. The A1 notes were placed with banks at a coupon of 100 basis points over Treasuries, while the A2 notes, priced at par, carried a 5.75% coupon and attracted institutional buyers, including Apollo's insurance affiliate, Athene. A third tranche, the $4.5 billion B notes, which lacks Broadcom's guarantee, was priced at par with a higher 8.5% coupon.

Underpinning the senior debt is a residual value support agreement from Broadcom. This provision offers a critical layer of security: should Anthropic default on lease payments for a specified duration, the special-purpose vehicle would liquidate the chips, and Broadcom would fully cover any shortfall for A1 and A2 noteholders. This innovative structure is reminiscent of a similar arrangement Meta utilized for its Louisiana data center, which facilitated bond trading aligned with the tech giant's corporate debt.

This substantial financing injection comes as Anthropic, the developer behind the Claude AI, reportedly prepares for a potential public offering. The company has recently filed confidentially for a U.S. listing, aiming to precede competitors like OpenAI. This move follows a significant funding round that valued the company at an impressive figure, incorporating this new capital. The strategic deployment of these funds is expected to solidify Anthropic's position at the forefront of AI development, requiring immense computational resources.