Apollo and Blackstone Arrange $35 Billion Private Credit Deal for Anthropic, Backed Largely by Broadcom Guarantees

Apollo and Blackstone raised $35 billion in private credit financing for Anthropic through a special purpose vehicle. The transaction is one of the largest private credit fundraisings completed to date. The financing will fund Anthropic’s continued development of its Claude AI models and related infrastructure.

The deal, dubbed Project Big Sky, was structured across three tranches. The senior tranches consist of $6 billion A1 notes and $24 billion A2 notes, both backed by Broadcom. The senior notes received private ratings in the mid-investment grade tier.

5 billion junior debt tranche is not supported by Broadcom. The $6 billion A1 notes were sold to banks at an interest rate of 1% over Treasuries. 75%.

Buyers of the A2 tranche included Apollo’s Athene insurance arm. 5%. Investors were offered an original issue discount of 98 cents to 99 cents on the dollar depending on cheque size.

Apollo’s Atlas SP Partners’ structured-finance unit provided $800 million in equity to the SPV. Apollo’s Atlas SP Partners is effectively the owner of the SPV. The SPV purchases the chips and leases them to Anthropic.

The debt is primarily backed by lease payments from Anthropic and the long-term value of the chips. Broadcom provides a residual value support agreement for the chips. Under the residual value support, if chip sale proceeds do not cover the debt, Broadcom will make up the shortfall for 100% of the value owed to A1 and A2 investors.

The chips being financed are Alphabet-developed tensor processing units made by Broadcom. Morgan Stanley advised Broadcom and arranged the transaction. Broadcom CEO Hock Tan said the company hoped to connect investor partners with the strongest balance sheets to deliver at scale sufficient compute capacity at the lowest cost.

Hock Tan pointed to the deal with Apollo and Blackstone as the first of many transactions to come. Anthropic confidentially filed for an IPO shortly after its $65 billion private financing round. Alphabet completed one of the largest equity offerings in history to raise $85 billion.

SpaceX is preparing for a flotation that could raise $86 billion. Investors pitched on the deal were not given early access to Anthropic’s financials ahead of its IPO.