$63 Billion, the Largest AI Infrastructure Financing in History! Broadcom CEO Steps In Personally as Wall Street Watches for a "Mega Bond Issuance" in Q1 Next Year

Author: Dong Jing

Source: Wallstreetcn

A record-breaking AI infrastructure financing deal nearly fell apart at the last minute.

According to a Wall Street Journal report on October 27, Broadcom CEO Hock Tan personally stepped in, holding emergency negotiations with several bank executives over the final weekend, ultimately finalizing a deal worth up to $63 billion in AI chip financing—the largest AI infrastructure debt financing in the world to date.

The deal, codenamed "Project North Star," aims to help AI startup Anthropic lease custom chips co-developed by Broadcom and Google, and was disclosed in sync with Anthropic's IPO filing. The transaction was co-led by Bank of America, Citigroup, and Morgan Stanley, with Blackstone committing $9 billion to anchor another portion of the financing.

The report noted that the deal's completion was far from smooth sailing. According to people familiar with the matter, over the past several weeks, some participating banks—citing rising interest rates and heightened AI market risks—felt the compensation was insufficient to cover their exposure and at one point considered withdrawing. Hock Tan then launched "last-minute" negotiations over the weekend, agreeing to raise loan interest rates and offer banks stronger loss protection commitments to stabilize the situation.

Separately, according to Bloomberg, the banks plan to issue approximately $21 billion in bonds to the U.S. investment-grade corporate debt market as early as Q1 2027 to hedge their approximately $42 billion in loan exposure. This issuance plan is being closely watched by Wall Street and Silicon Valley as an important bellwether for investor appetite for AI project financing.

The Largest AI Financing in History: Banks and Private Credit Join Forces in Rare Partnership

Beyond its size, the "North Star" deal set another record: banks and private credit institutions—two types of capital forces that typically compete with each other—joined forces for the first time to complete AI infrastructure financing of this magnitude.

According to the Wall Street Journal, the entire $63 billion financing consists of two parts:

• Approximately $42 billion in senior secured loans, underwritten by a banking syndicate, with Broadcom providing a guarantee backstop;
• Another approximately $18 billion in riskier subordinated debt, which does not carry a Broadcom guarantee, half of which is funded by Blackstone.

Banks plan to distribute about half of their loan holdings (approximately $22 billion) to the investment-grade bond market. According to Bloomberg, the final bond size is approximately $21 billion, with an expected maturity of about five years, and principal to be amortized over the life of the bonds. The specific issuance size and timing will depend on market conditions.

This is also Broadcom's second major chip financing completed this year. Previously, Broadcom had completed a $35 billion deal with Apollo Global Management and Blackstone.

Broadcom's "Multiple Hats": Supplier, Guarantor, Negotiator

In the "North Star" deal, Broadcom played an extremely rare multi-faceted role.

As a chip supplier, Broadcom co-developed with Google the tensor processing units (TPUs) needed by Anthropic. As a financing intermediary, Broadcom essentially provided "vendor financing"—the deal structure is: a special purpose vehicle (SPV) borrows $63 billion to purchase chips, then leases the chips to Anthropic, with Anthropic's rental income used to repay the debt.

Broadcom's key role lies in the backing of its balance sheet. According to Bloomberg, Broadcom disclosed in a regulatory filing this week that its potential guarantee liability is capped at: in the event of an Anthropic default, Broadcom must cover the shortfall between "72.5% of the outstanding lease amount" and "the disposal value of AI rack assets." Broadcom believes the probability of this guarantee being triggered is low. It is precisely this "residual value support" mechanism that enabled banks to include approximately $42 billion in senior secured loans within their underwriting scope.

Hock Tan's direct involvement in the negotiations further underscored the importance of this deal to Broadcom's strategic position. According to the Wall Street Journal, he communicated individually with bank executives over the final weekend, ultimately trading higher interest rates for commitments from all parties.

Critics have dubbed the financing model represented by "North Star" as "circular financing."

In Anthropic's IPO prospectus, the company disclosed that it expects to pay over $125.2 billion to lease Broadcom chips, while Broadcom and Google have each committed $42 billion and $20 billion in funding support to Anthropic. This means Broadcom is simultaneously the chip seller, the financing provider, and the guarantor—with capital flowing in a closed loop among all parties.

"North Star" is the sequel to the previously codenamed "Big Sky" Anthropic-Broadcom chip financing deal. According to the Wall Street Journal, "Big Sky" was financed by Apollo, but Apollo has yet to complete investor distribution of some of the debt. An Apollo spokesperson said the company has "completed distribution of all 'Big Sky' debt."

AI Debt Market "Indigestion" Puts Banks Under Pressure

The perilous nature of the "North Star" negotiations reflects deeper market pressures: the supply of AI-related debt has caused the market to show signs of "indigestion."

According to the Wall Street Journal, since the start of the year, hundreds of billions of dollars in AI-related bonds and loans have flooded the market. Many banks are still working to absorb previously committed loans, limiting their capacity for new underwriting. Some banks have been forced to sell loans at a discount to free up capital, while others have chosen to hold, further compressing their room to participate in new deals.

According to Bloomberg, global AI-related financing has exceeded $455 billion this year, but asset managers' willingness to continue increasing AI debt exposure is waning.

Morgan Stanley's situation is particularly telling. According to the Wall Street Journal, citing debt fund managers, Morgan Stanley is struggling to issue approximately $300 million in asset-backed bonds for a Kansas City data center project codenamed "Project Blitz," operated by AI compute startup Lambda. Even after Morgan Stanley roughly doubled the bond yield, buyers remain scarce.

Interest rate trends are another sword of Damocles hanging over this deal. According to the Wall Street Journal, banks plan to wait until chips are delivered next year before selling bonds to fund managers. If interest rates rise significantly by then, banks will face losses from selling at a discount—because they have already committed to locking in loan rate ceilings. Some banks may choose to hold the loans rather than sell at a loss.

Wall Street Closely Watches Next Year's Q1 "Mega Bond Issuance"

The final completion of "North Star" is both a microcosm of AI infrastructure financing continually breaking through ceiling after ceiling and a signal that this market is approaching its limits.

For Wall Street, the approximately $21 billion investment-grade bond issuance in Q1 next year will be a real stress test—examining how much appetite investors truly have against the backdrop of both AI financing frenzy and market absorption pressure. For Broadcom, this deal consolidates its position as an "indispensable" hub in the AI supply chain, but also means its balance sheet is increasingly deeply intertwined with Anthropic's fate.

As the Wall Street Journal noted, Broadcom plays the roles of supplier, guarantor, and negotiator simultaneously in this deal, "reflecting the intertwined nature of the big AI bets that are reshaping the economic landscape, and the high stakes borne by all parties involved."