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Blackstone told investors Anthropic may not receive an investment-grade rating immediately after going public, a reversal from its previous guidance that would complicate the AI lab’s ability to finance its massive spending.
The private capital giant told investors in Anthropic’s latest $63bn chip financing deal that the start-up is expected to receive a “high” junk rating from major credit rating agencies after its initial public offering, according to people familiar with the matter.
Blackstone is acting as an anchor investor on the deal, known as “Project North Star”, and is working with banks that stumped up financing on selling the debt on to other investors.
Anthropic filed to go public on Monday, setting up what could be the largest listing of all time next month. The AI lab’s prospectus sketched out its “bold but sane” plans to spend more than $800bn on computing infrastructure between now and 2045.
An investment-grade credit rating is central to those ambitions, enabling Anthropic to borrow at lower rates to finance its AI infrastructure projects. The group has cash and equivalents of more than $112bn, and investors anticipate it could raise about $100bn more in the IPO. Sign reading "Blackstone" outside the Blackstone headquarters in New York, with pedestrians and city lights reflected in the glass. Blackstone’s funds have invested in $9bn of the junior debt at a lucrative yield of more than 10% © Angus Mordant/Bloomberg
While Blackstone had told its investment partners in recent months that it was expecting an investment-grade rating for Anthropic before year-end, it has recently signalled that a rating in the double B range or above is more likely given the guidance it has received from major credit agencies, the people said.
Such a designation would limit the pool of capital that Anthropic could tap because many insurance and pension funds are restricted from taking large positions in junk-rated borrowers. As a result, the company might need to continue to rely on its suppliers with high credit ratings to support its debt-raising efforts.
US tech stocks slid to session lows on Friday following the FT’s report on Anthropic’s rating, with the Nasdaq 100 down 3.7 per cent in afternoon trading. Markets were sharply lower prior to the report after earnings from Amazon and Intel worsened fears about the sustainability of the AI boom.
“It’s all about access to credit, it really matters . . . if [Anthropic] isn’t investment grade, the cost of credit goes higher, that’s not good for anyone,” said a US tech-focused portfolio manager.
“It’s a bloodbath out there,” they added, referring to the sell-off in stocks.
Wall Street banks earlier this week closed the North Star deal, which provides the financing for Anthropic to lease 1.5 gigawatts of Google’s semiconductors. More than $42bn of the senior loans is guaranteed by Broadcom, which co-develops the chips and has an investment-grade rating, while $18bn of the junior debt is backed by the AI start-up’s lease payments.
Institutional investors covet senior debt because it takes priority over junior loans in the case of a default. Broadcom’s high A-tier credit rating was an important factor in allowing Anthropic to secure the financing.
Blackstone’s funds invested in $9bn of the junior debt at a lucrative yield of more than 10 per cent, the FT previously reported. Bankers for Anthropic and rival OpenAI have also lobbied the largest rating agencies to grant the AI labs investment-grade ratings after their IPOs.
Project North Star’s $18bn junior debt, which exposes lenders more acutely to Anthropic’s credit risk, has been assigned a double B plus rating with positive outlook from Kroll Bond Rating Agency, a slight improvement from stable outlook in a similar deal known as Project “Big Sky” four months ago. It also received a double B rating from Morningstar DBRS, the people added.
The big three credit agencies — Fitch, Moody’s and S&P — which have bigger influence on companies’ borrowing costs, have not officially issued any credit ratings for Anthropic.
Anthropic, Blackstone, KBRA, Morningstar DBRS and S&P declined to comment. Fitch and Moody’s did not respond to requests for comment.
And it's going to kill us us all.
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Machines of love and grace.
We are building it.
It's going to build a great earth. Like kingdom of God.
Buy stocks. Please.
Ohh and we are making a wet lab..
It's going to be great. Buy our stocks please.
Don't say our stock is junk.
It would hurt Claude.
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Or roko basilisk will kill us all.
By any sane normal sense of business and financials these AI labs look terrible on paper.
Any loan would be speculative at best, and the rating would simply reflect that.
This line is certainly eyebrow-raising to the educated layman.
Apparently it means that anthropic is leasing a Google data center whose constituent servers draw 1.5 GW of power running representative workloads.
rzz3•1h ago
youngtaff•58m ago
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eqvinox•46m ago
I'd also add: from paid online news, I also expect a moderated forum/comment section, with a human to escalate to if automatic/AI moderation fails.
isatty•40m ago
2. Never going to visit this site again and I am not going to make an account for it
I am however, okay with turning off the ad blocking if they’re running reasonable ads (not every other paragraph).
paxy•18m ago
lurk2•16m ago