$63bn Deal Funds Broadcom Chips Leased to Anthropic

Bank of America, Blackstone, Citi and Morgan Stanley have announced a $63 billion financing to buy Broadcom AI chips and networking equipment that will be leased to Anthropic. Broadcom is not one of the four financiers, but it is backing the senior debt through what it calls residual value support.

The joint announcement, issued on 26 October, says the deal is part of Broadcom’s previously announced compute capacity agreement with Anthropic, with deliveries expected to start in calendar 2027. It puts a confirmed figure on a financing TSN first reported at about $60bn from secondary coverage earlier this month.

In brief

A new special purpose vehicle will buy Broadcom XPU AI accelerators and networking gear and lease them to Anthropic, funded by $63bn from four financiers.
Bank of America, Citi and Morgan Stanley are arranging the first lien; Blackstone is the sole provider of the committed second lien.
Broadcom’s support covers an amount equal to the first lien, with peak exposure of $43bn that Broadcom expects to fall to zero.
Reuters, citing two sources, puts the first lien at about $43.5bn, or 69% of the total.

How the deal is structured

The financing runs through a newly formed special purpose vehicle (SPV), a company set up only for this deal. According to the release, the SPV has “committed financing from the Lead Financial Partners to support the purchase of Broadcom XPU AI accelerators and networking solutions to be leased to Anthropic”. Milbank, which advised it, names the vehicle Northstar Compute LLC and describes it as “a new compute finance and lease platform” raising “$63 billion in debt and equity”.

The debt comes in two layers. “The first lien portion of the financing is being arranged by Bank of America, Citi and Morgan Stanley, with Blackstone as the sole provider of the committed portion of the second lien financing,” the release says. First-lien lenders are repaid first; second-lien lenders rank behind them and take more risk. Broadcom’s investor slides describe Blackstone as “the anchor provider of second lien financing”.

The release does not give the size of each layer. Reuters, citing two sources familiar with the matter, reported that the first lien is about $43.5 billion, or 69% of the total. Broadcom’s lawyers, Sullivan & Cromwell, say the deal will fund 1.7 gigawatts of AI compute, part of the 3.5-gigawatt agreement Broadcom announced with Anthropic.

Broadcom’s residual value support

“Broadcom is providing residual value support to the SPV for the amount equivalent to the first lien portion of the financing,” the release says. Broadcom’s investor slides set out how it works. The potential liability “is any difference between 72.5% of the outstanding amounts owed on the lease and the value of the AI racks received”.

Put simply, Broadcom’s exposure is limited to any gap between 72.5% of what is still owed on the lease and what the racks are worth. The slides state that “peak exposure [is] expected to be $43 billion and decline to zero”, and that the support “is not a direct cash outlay”. An illustrative chart shows it falling in a straight line over five years of lease payments, though Broadcom notes actual balances and timing may differ.

Hock Tan, Broadcom’s chief executive, said the deal “validates that there is capital available to finance such growth and that Broadcom is uniquely positioned to enable it”. Jon Gray, Blackstone’s president, said demand for AI “is creating an enormous opportunity to finance compute capacity at scale”.

Why Broadcom’s backstop carries the deal

The structure lets Anthropic use the chips without buying them, while the four financiers, not Broadcom, supply the capital. What makes it work for the senior lenders is Broadcom’s promise, which ties a large contingent exposure to how much a specific set of AI racks is worth in future.

Broadcom argues that the risk is remote. Its slides list “multiple layers of protection” ahead of its support, including Anthropic’s contracted lease payments, the option to re-lease the racks, their collateral value and customer credit, and conclude there is a “low probability” that the support is ever called. That is the company’s own assessment. The key unknown is how fast specialised AI hardware loses value, which neither the release nor the slides quantify.

Anthropic’s side matters too. Its Nasdaq filing shows $16.3 billion of first-half revenue alongside an $80.7 billion net loss, most of it a fair-value charge. Earlier, the FT and Reuters reported that it had told investors its third-quarter revenue reached $16.8 billion. The lease payments are what service the debt.

This is not the only deal of its kind. The Wall Street Journal has reported Broadcom arranging financing for OpenAI’s custom chip, and SpaceX has described its $40bn GPU deal as a lease. Reuters also reports that Apollo and Blackstone earlier agreed to finance a $35 billion expansion of Anthropic’s computing capacity under a prior Broadcom agreement, with a Broadcom backstop of up to $29 billion, citing a Broadcom filing. Reuters notes that chipmakers have provided guarantees in the past to absorb potential declines in the value of assets such as advanced chips.

What happens next

Deliveries are expected to start in calendar 2027. The split of the $63 billion between first lien, second lien and any equity has not been published, and Broadcom did not respond to Reuters’ request for comment. Broadcom’s release carries a forward-looking caveat that the timing of the deployment could differ from current expectations.