Apollo Completes $35 Billion Debt Financing for Anthropic AI Chip Acquisition

Apollo Global Management Inc. and Blackstone Inc. Finalize $35 Billion Financing Package for Anthropic PBC

Apollo Global Management Inc. and Blackstone Inc. have completed a massive $35 billion financing package for Anthropic PBC to expand its artificial intelligence (AI) infrastructure, marking one of the largest private credit transactions in history. The debt deal, which priced across three tranches, will fund Google's custom chips for Anthropic to lease, as previously reported by Bloomberg.

The financing package highlights the intense competition among top-tier financiers to fund data center construction and the chips they use. Tech companies are tapping every corner of the credit markets to meet AI's unprecedented capital demands, forcing Wall Street to engineer novel debt structures to keep pace. Under the deal, Broadcom Inc. is backstopping payments on the largest senior portions of the debt, while Morgan Stanley advised on the transaction.

Roughly half of the $35 billion of debt was syndicated to other investors, according to people familiar with the matter. The deal represents a milestone for the emerging chip-financing market, which is projected to expand rapidly as a wave of new data centers creates sustained demand for specialized hardware. The transaction is expected to be the first of many for Broadcom, which is helping Google develop tensor processing units, called TPUs.

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Deal Structure and Key Features

The $35 billion debt facility was structured across three tranches: the senior layers, backed by Broadcom, and the third tranche, which doesn't carry the Broadcom backing. The A1 tranche, sold to a group of banks, priced at a coupon of 1 percentage point over Treasuries, while the A2 notes priced at par with a 5.75% coupon. The third tranche, B notes, priced at par with an 8.5% coupon.

Apollo's Atlas SP Partners' structured-finance unit provided $800 million in equity, making it the owner of the special-purpose vehicle (SPV). A key feature of the deal is Broadcom providing a "residual value support" agreement, which will protect debt investors if Anthropic fails to make lease payments.

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Residual Value Support and Potential Risks

The deal includes a residual value support agreement, where Broadcom will make up the shortfall for 100% of the value owed to the A1 and A2 investors if the value of the chips doesn't make the debt investors whole. This type of feature has been used in another mega debt deal, which financed the construction of a data center rather than chips.