Blackstone expects Anthropic to struggle to obtain an investment-grade rating after going public, potentially falling into the BB junk-grade category

The trigger for "Black Friday": Anthropic can only be "junk grade"? Wall Street Insights November 01, 2026 09:00:33

Blackstone told investors that Anthropic may not be able to obtain an investment-grade rating immediately after going public, and it expects the major rating agencies to assign it a "higher-tier" junk rating.

According to the Financial Times, citing people familiar with the matter, Blackstone conveyed this information to investors in Anthropic's latest $63 billion chip financing deal. If the rating falls into junk grade, the prospects for financing Anthropic's more than $800 billion computing power plan will become more complicated.

Kevin Paffrath, an American financial blogger and host of the YouTube channel Meet Kevin, believes this news was the trigger for the accelerated decline in U.S. stocks on Friday: "As soon as the news came out, the market fell even harder."

In his view, the crux is that Anthropic's computing power commitments would require more than a decade of profits to cover, yet it cannot obtain an investment-grade rating.

That day, earnings reports from Amazon and Intel had already intensified market concerns about the sustainability of the AI boom, and U.S. stocks had already fallen sharply before the report was published; after the report was released, U.S. technology stocks fell further to intraday lows, and the Nasdaq 100 Index closed down 3.5%.

Investment-grade expectations fall through

People familiar with the matter said that over the past few months, Blackstone had been telling investment partners that it expected Anthropic to obtain an investment-grade rating by the end of the year. But according to guidance from major rating agencies, Blackstone recently changed its tune, saying it is more likely that Anthropic will receive a rating in the BB range or above.

Under the rating systems of S&P and Fitch, BBB- and above is investment grade, while BB+ and below is speculative grade, commonly known in the market as "junk grade." The BB range (BB+, BB, BB-) is the highest tier within junk grade, immediately adjacent to the investment-grade threshold, which is exactly what "higher-tier" junk grade means.

This rating is crucial to Anthropic. The company submitted its listing application on Monday and may complete the largest IPO in history next month. The prospectus outlines a "bold but sane" plan: from now until 2045, invest more than $800 billion in computing infrastructure.

Currently, Anthropic holds more than $112 billion in cash and equivalents, and investors expect the IPO to raise about another $100 billion.

An investment-grade rating would allow Anthropic to borrow at lower interest rates to finance these projects. Many insurance companies and pension funds are by regulation allowed to invest mainly in investment grade, or are restricted in the scale of junk-grade debt they may hold. Once an issuer falls to BB+ or below, the pool of capital it can access will narrow significantly, and interest rates will also be higher.

"The key is whether credit can be obtained, and this is very important... if (Anthropic) is not investment grade, the cost of credit will rise, and that is not good for anyone," said a fund manager focused on U.S. technology stocks. As for that day's stock market selloff, the fund manager's assessment was: "It's simply a bloodbath out there."

Bankers for Anthropic and its competitor OpenAI are both lobbying several of the largest rating agencies in the hope that the two AI companies will receive investment-grade ratings after going public. The three major rating agencies that have a greater impact on corporate borrowing costs—Fitch, Moody's and S&P—have so far not formally assigned any credit rating to Anthropic.

The books are not bad, but the commitments are too heavy

In Kevin Paffrath's view, Anthropic's problem is not its balance sheet.

According to his interpretation, Anthropic holds about $112 billion in cash and $19 billion in short-term investments, totaling about $131 billion, with current liabilities of only about $7 billion; operating cash flow has already turned positive, with free cash flow of about $3.5 billion in the first half of the year. If the IPO raises another $100 billion, available funds will reach about $231 billion.

The pressure comes from the scale of the commitments. Paffrath estimates that after deducting the above funds from the roughly $800 billion computing power commitment, about $569 billion still needs to be filled. Assuming Anthropic's annualized revenue reaches $80 billion by the end of the year and its net margin is 40%, it could contribute about $32 billion per year, and covering this gap would take about 17 years.

"It's equivalent to betting 17 years of profits on future computing power commitments, and that is what makes people nervous," he said. "You've just received a junk rating—how are you going to do it? That is what angered the market today."

Paffrath also compared it with SpaceX. He mentioned that SpaceX has obtained investment-grade ratings from the three major rating agencies, possibly because its business does not rely only on AI but also on rocket launches and Starlink.

However, Paffrath himself remains bullish. He believes Anthropic's revenue growth will exceed market expectations; he is also unconcerned about outside worries over vendor financing, on the grounds that Broadcom's net margin is about 55%, so even effectively "giving" chips to Anthropic would be enough to cover costs. He sees this round of decline as an opportunity to buy on dips.

"North Star": financing backed by Broadcom's credit

This $63 billion financing is codenamed "Project North Star," and Wall Street banks completed the deal earlier this week. The funds will be used for Anthropic to lease 1.5 gigawatts of chips from Google. Blackstone served as anchor investor and worked with the underwriting banks to resell the debt to other investors.

The transaction structure shows Anthropic's reliance on vendor credit. More than $42 billion of senior loans are guaranteed by Broadcom, which participated in the joint development of these chips and has a high A-tier investment-grade rating, an important factor enabling Anthropic to obtain this financing. Institutional investors favor senior debt because, in the event of default, its repayment order ranks ahead of subordinated loans.

Another $18 billion of subordinated debt is backed by Anthropic's lease payments, so lenders bear Anthropic's credit risk more directly. According to prior media reports, a Blackstone fund subscribed to $9 billion of it at a high yield of more than 10%.

This portion of subordinated debt received a BB+ rating from Kroll Bond Rating Agency (KBRA), only one notch below investment grade, with a positive outlook, slightly improved from the stable outlook on a similar deal, "Big Sky," four months earlier; Morningstar DBRS assigned it a BB rating.

Anthropic, Blackstone, KBRA, Morningstar DBRS and S&P all declined to comment, while Fitch and Moody's did not respond to requests for comment.