Banks and Blackstone line up 63 billion dollars to buy Broadcom AI chips for Anthropic, and the WSJ reports Hock Tan stepped in to save the deal
SCOOP: Broadcom CEO Hock Tan was getting impatient. He needed lenders to commit $40 billon in the largest AI debt deal ever—so Anthropic could afford TPUs—but some were getting cold feet. In the end, Broadcom’s CEO held 11th-hour talks with bank executives over the weekend to get them to finalize their commitments. Broadcom also agreed to higher interest rates on the loans, sweetening the deal. With @ajsaeedy @ mattwirz for @WSJ
Context
It is described as the largest debt deal ever raised for AI infrastructure, and it shows chip suppliers now guaranteeing loans so their customers can afford compute. The account of Hock Tan's last minute talks is a Wall Street Journal report based on unnamed people familiar with the matter.
Broadcom and Anthropic previously announced a strategic compute capacity agreement for custom XPU accelerators, with deliveries expected to start in 2027. On October 26, the same day Anthropic filed its S1, Bank of America, Blackstone, Citi and Morgan Stanley announced the 63 billion dollar financing. The WSJ scoop on how the deal was saved was posted by reporter Anissa Gardizy at 9:56 PM Eastern.
Deep dive
Bank of America, Blackstone, Citi and Morgan Stanley announced on October 26 a 63 billion dollar transaction to fund AI compute capacity for Anthropic using Broadcom technology. According to the companies' press release, a newly formed special purpose vehicle will buy Broadcom XPU AI accelerators and networking gear and lease them to Anthropic, with deliveries expected to begin in 2027.
Bank of America, Citi and Morgan Stanley are arranging the first lien financing, and Blackstone is the sole provider of the committed second lien portion. Broadcom is providing residual value support equal to the first lien amount, which works as a large guarantee for the senior lenders. Reuters, citing two sources, put the first lien loans at about 43.5 billion dollars, or 69 percent of the total.
Later that evening, the Wall Street Journal reported that Broadcom CEO Hock Tan had spent nearly two months trying to get banks to commit more than 40 billion dollars, and that some lenders grew nervous about rising interest rates and their exposure to AI. According to the WSJ, which cited people familiar with the matter, Tan held talks with bank executives over the weekend and agreed to higher interest rates and guarantees covering an Anthropic default to close the deal.
The financing arrived hours after Anthropic publicly filed for its IPO. Reuters noted that Apollo and Blackstone had already agreed to finance a separate 35 billion dollar expansion of Anthropic's compute under an earlier Broadcom agreement, with a Broadcom backstop of up to 29 billion dollars.
What to expect next
Watch whether Anthropic's S1 is amended to reflect the new lease obligations and whether Broadcom discloses its full guarantee exposure in its next filing or earnings call. The deal will also be a test case for lenders weighing more chip backed financing for AI labs, especially if interest rates keep rising. Deliveries of the Broadcom built accelerators are scheduled to start in 2027, so the first real check on the structure comes when Anthropic begins paying for the leased capacity.