A Banker’s Guide to Anthropic

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Reminder: I’m on stage at the TomorrowX Summit in Austin next week, and then at Fintech Nerdcon in San Diego. I’ll then be in New York. If you want to catch up, please get in touch. When Anthropic lists on the stock market next week, the money it raises will be just the start. Through its IPO, Anthropic plans to raise as much as $100 billion. Leveraged up, though, that can go much further. So far, Anthropic has refrained from tapping the corporate bond market. As a young start-up burning billions of dollars a year on an untested business model, it would hardly have had a look-in. Instead, it has relied on equity investors and on suppliers, who together have put in more than $140 billion. But with a Nasdaq listing and a cash pile of $212 billion, its charms are harder to resist. In the run-up, it already secured a $15 billion revolving credit facility from banks managing its IPO. The bigger prize is the bond market. Shortly after its own IPO in June, SpaceX raised $25 billion of senior unsecured bonds. Anthropic’s bankers would like to follow. To do that on good terms, it needs a credit rating, specifically an investment-grade one. Its bankers, Morgan Stanley and Goldman Sachs, have been lobbying Moody’s and S&P to grant one as soon as it lists. A rating of BBB– or higher would open Anthropic up to the $13 trillion global investment-grade market, and the insurers and pension funds that dominate it. Suppliers have a vested interest, too. When we discussed it in The Art of Doing Financial Engineering, Broadcom had agreed to stand behind $30 billion of debt raised to buy hardware leased to Anthropic. Last month, a second deal took its commitments to more than $70 billion. Broadcom would like to share the load. “It’s an open secret, Anthropic is well on its way to an IPO, and with that, its investment credit will change,” chief executive officer Hock Tan told analysts. An investment-grade rating would let future financings rest on Anthropic’s own credit, rather than its suppliers’. Even the revolver hinges on it: for now the facility is secured, but the collateral falls away – and the pricing improves – once two of the three major agencies call Anthropic investment grade. One agency reckons it’s there. AIR Platforms is an AI-native credit intelligence and risk-scoring startup founded by Moody’s and Goldman Sachs veterans. It rates Anthropic BBB, two notches above OpenAI. Sadly for the company, AIR Platforms is not a “nationally recognized statistical rating organization” so it doesn’t count. Kroll Bond Rating Agency, which is, rates Anthropic BB+. Blackstone, which marketed the latest Broadcom-backed deal, thinks a rating in the BB range is more likely once the IPO is done. Key to the outcome is Anthropic’s cash flow profile. A $1.4 trillion market cap would be nice, and would give comfort to lenders, but it can’t be used to repay debt: you need free cash flow for that. To see how Anthropic plans to pay for close to $1 trillion of commitments, and who is lending it the money, read on. Read more

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