What happened
Anthropic has structured a $60 billion financing package, dubbed Project North Star, to acquire approximately 1.5 gigawatts of Google’s custom tensor processing units (TPUs). Blackstone-managed funds are expected to invest $9 billion in junior debt backed by Anthropic’s five-year chip lease payments, receiving a coupon of 10% or more. The remaining $9 billion in junior debt is slated for other investors, while approximately $42 billion in senior debt is guaranteed by Broadcom. This deal follows Anthropic’s earlier Project Big Sky financing and reflects rising borrowing costs for AI infrastructure.
According to the Financial Times, Anthropic is offering Blackstone a yield of more than 10% to finance a $60 billion artificial intelligence chip deal. This arrangement, known as Project North Star, is described as the largest chip-financing deal to date. The funds will support Anthropic’s acquisition of approximately 1.5 gigawatts of Google’s custom tensor processing units (TPUs), a move driven by the intense competition among AI developers to secure sufficient computing capacity.
The financing structure involves Blackstone-managed funds investing $9 billion in junior debt. This debt is backed by Anthropic’s five-year chip lease payments and represents half of the planned $18 billion junior financing. Blackstone has been offered a 10% coupon, with total returns expected to exceed this level after accounting for issuance discounts and fees. This rate is notably higher than the approximately 7% yield typically paid by similarly rated borrowers in public bond markets, reflecting heightened risk premiums for AI infrastructure spending.
The remaining $9 billion in junior debt is expected to be offered to other investors in the coming months, potentially at lower yields. The broader financing package also includes approximately $42 billion in senior debt, which is guaranteed by Broadcom, a key collaborator with Google on chip development. This deal follows Anthropic’s Project Big Sky financing, where the company raised around $4.4 billion at an 8.5% interest rate four months ago, indicating a trend of increasing borrowing costs for the company.
Anthropic received a credit rating one notch below investment grade from KBRA in June, and the new junior debt is expected to receive a similar assessment. The company is actively seeking investment-grade status to lower future borrowing costs. The debt could become tradable in the institutional 144A bond market after the financing is drawn down in 2027. Separately, Anthropic has opened communications with New York City Comptroller Mark Levine following his call to delay the company’s initial public offering until it addresses and governance concerns.
Source details: livemint.com ↗
Why it matters
This transaction signals a significant shift in how AI companies fund their infrastructure, moving toward complex, high-yield debt structures rather than traditional equity or lower-cost borrowing. The double-digit yield demanded by Blackstone highlights investor skepticism regarding the risk profile of massive AI capex, as similarly rated borrowers typically pay around 7% in public markets. For the industry, this sets a new for the cost of capital in AI hardware acquisition, potentially influencing how other labs finance their compute needs. It also underscores the growing reliance on specialized financial instruments to support the physical expansion of AI capabilities, linking the fate of AI development directly to broader credit markets and institutional investor appetite for tech debt.
The high yield demanded by Blackstone underscores the financial risks associated with the rapid expansion of AI infrastructure. Investors are requiring significant compensation for the uncertainty surrounding the return on investment for such massive hardware acquisitions. This shift from lower-cost equity or traditional debt to high-yield junior debt suggests that the market is pricing in a higher risk of default or underperformance for AI-focused capital expenditures.
For Anthropic, securing this financing is critical to maintaining its competitive position in the AI race, where access to compute is a primary bottleneck. However, the high cost of capital could impact the company’s long-term profitability and its ability to sustain aggressive growth. The reliance on complex debt structures also introduces new financial vulnerabilities, as the company’s ability to service this debt depends on the success of its AI products and the continued demand for its services.
This deal sets a precedent for how other AI companies may finance their infrastructure needs. If other labs face similar borrowing costs, it could lead to a broader increase in the cost of capital for the AI industry, potentially slowing down the pace of expansion or forcing companies to seek alternative funding sources. The involvement of major financial institutions like Blackstone and Broadcom also highlights the deepening integration of AI development with traditional financial markets.
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What to watch next
Investors should monitor the placement of the remaining $9 billion in junior debt and whether other AI companies adopt similar high-yield financing structures. Additionally, the potential listing of this debt in the institutional 144A bond market in 2027 will be a key indicator of market confidence in Anthropic’s creditworthiness. The outcome of Anthropic’s ongoing discussions with New York City Comptroller Mark Levine regarding its IPO timeline and safety governance will also be critical, as regulatory pressure could impact the company’s ability to execute these large-scale financial maneuvers.
The placement of the remaining $9 billion in junior debt will be a key indicator of market appetite for AI-related debt. If other investors demand similar or higher yields, it could signal broader concerns about the sustainability of AI infrastructure spending. Conversely, if the debt is placed at lower yields, it may indicate growing confidence in the sector.
The potential listing of the debt in the institutional 144A bond market in 2027 will provide a clearer picture of Anthropic’s creditworthiness and the market’s perception of its risk profile. This could also influence the company’s ability to raise capital in the future, including for its planned initial public offering.
The outcome of Anthropic’s discussions with New York City Comptroller Mark Levine will be important for understanding the regulatory environment surrounding AI companies. If the comptroller’s concerns about safety and governance lead to delays in the IPO, it could impact the company’s financial strategy and its ability to execute large-scale projects like Project North Star.