Broadcom Finalizes $63 Billion AI Chip Financing, Guaranteeing Anthropic's TPU Lease

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 and ultimately closing an AI chip financing deal totaling as much as $63 billion—the largest debt financing for artificial intelligence infrastructure anywhere to date.

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

The report said the deal did not come together smoothly. According to people familiar with the matter, over the past several weeks some of the participating banks, citing rising interest rates and mounting AI market risks, concluded that the compensation they were offered was insufficient to cover the risk and at one point considered withdrawing. Hock Tan then launched "last-minute" negotiations over the weekend, agreeing to raise the loan interest rate and to provide banks with stronger loss-protection commitments, which finally stabilized the situation.

Separately, Bloomberg reported that the banks plan to issue about $21 billion of bonds into the U.S. high-grade corporate bond market as early as the first quarter of 2027 to hedge their roughly $42 billion loan exposure. The issuance plan is being closely watched by Wall Street and Silicon Valley and is seen as an important bellwether for testing investors' willingness to finance AI projects.

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

About $42 billion in senior secured loans, underwritten by the bank syndicate, with Broadcom providing a guarantee endorsement;

Another roughly $18 billion in riskier subordinated debt, which does not carry a Broadcom guarantee, half of which is funded by Blackstone.

The banks plan to distribute about half of the loans they hold (about $22 billion) to the investment-grade bond market. According to Bloomberg, the final bond size is about $21 billion, with an expected maturity of about five years, and principal will be repaid in installments over the life of the bonds; the specific issuance size and timing will depend on market conditions.

This is also the second large chip financing Broadcom has completed this year. Previously, Broadcom, together with Apollo Global Management and Blackstone, completed a $35 billion transaction.

Broadcom plays multiple roles: supplier, guarantor, negotiator

In the "Project North Star" transaction, Broadcom played an extremely rare combination of roles.

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

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

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

Critics call the financing model represented by "Project North Star" "circular financing."

In Anthropic's IPO prospectus, the company disclosed that it expects to pay more than $125.2 billion to lease Broadcom chips, while Broadcom and Google have respectively 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—funds flow in a closed loop among the parties.

"Project North Star" is a sequel to the previously codenamed "Big Sky" Anthropic-Broadcom chip financing transaction. According to the Wall Street Journal, "Big Sky" was financed by Apollo, but Apollo has still not completed the distribution of some of the debt to investors. An Apollo spokesperson said the company has "completed the distribution of all 'Big Sky' debt."

According to the Wall Street Journal, since the start of this year, hundreds of billions of dollars of AI-related bonds and loans have flooded the market, and many banks are still working to digest loans they had previously committed, limiting their capacity to take on new underwriting. Some banks have been forced to sell loans at a discount to free up capital, while others have chosen to hold them, further squeezing the room to participate in new transactions.

Morgan Stanley's situation is particularly typical. According to the Wall Street Journal, citing debt fund managers, Morgan Stanley is struggling to issue about $300 million of asset-backed bonds for the Kansas City data center project codenamed "Project Blitz," which is operated by AI computing startup Lambda. Even though Morgan Stanley has roughly doubled the bond yield, buyers remain scarce.

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

Wall Street watches next year's Q1 "mega bond issuance" closely

For Wall Street, the issuance of about $21 billion of high-grade bonds in the first quarter of next year will be a real stress test—testing just how much appetite investors still have against the backdrop of both an AI financing boom and market digestion pressure. For Broadcom, the deal consolidates its position as an "indispensable" hub in the AI supply chain, but it also means its balance sheet is increasingly deeply tied to Anthropic's fate.

As the Wall Street Journal noted, Broadcom plays the roles of supplier, guarantor and negotiator in this transaction at the same time, "reflecting the intertwined nature of the big AI bets that are reshaping the economy, and the high risks borne by all participants." Risk disclosure and disclaimer

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