Key Takeaways
- • Blackstone Inc. told investors, according to the Financial Times, that Anthropic's IPO next month would not dramatically improve its credit rating, abandoning earlier expectations that an IPO would lift the company to investment grade.
- • Blackstone expects Anthropic's $63 billion semiconductor financing plan to remain rated junk by major agencies after the IPO, though at the high end of speculative grade.
- • Anthropic's S-1 filing on October 26 outlined plans to invest more than $800 billion in AI infrastructure by 2045, while the company holds over $112 billion in cash and cash equivalents.
- • A junk rating would sharply narrow the investor base, since many insurers and pension funds restrict junk bond holdings, and could raise credit costs and weigh on the share price.
- • The forecast coincided with a second straight day of selloff in New York tech stocks after earnings from Alphabet, Amazon and Intel failed to clearly demonstrate returns on AI investment.
Summary
Blackstone Inc., the world's largest private equity firm, has told investors that Anthropic's initial public offering, expected next month and set to be the largest ever for an AI startup, would not materially improve the company's credit rating, according to the Financial Times, which reported the news on October 30 citing sources. Blackstone had previously forecast that Anthropic's rating would rise to investment grade on the back of the IPO, but has now abandoned that view. The shift suggests that financing the company's large AI infrastructure spending will be more complicated than expected.
According to the sources cited by the FT, Blackstone now expects Anthropic's $63 billion semiconductor financing plan to still receive a junk bond rating from major credit rating agencies after the IPO. The rating would sit at the high end of the speculative-grade category. Blackstone is acting as an "anchor investor" in the financing process, which it calls the "North Star Plan (Project North Star)," and is helping banks sell corporate bonds to other investors.
Anthropic's S-1 prospectus, released on October 26, said the company plans to invest more than $800 billion in AI infrastructure by 2045. The company currently holds more than $112 billion in cash and cash equivalents, but even if it raises about $100 billion through the IPO, it would need substantial outside capital, including corporate bond issuance. Investment-grade status would allow it to borrow more cheaply. A junk rating would significantly limit the pool of available funds, since many insurers and pension funds restrict junk bond investments, and Anthropic would likely need to rely on debt financing involving highly rated suppliers such as Broadcom and Nvidia.
The forecast landed during a broader tech selloff. Tech stocks on the New York market fell sharply for a second consecutive day after earnings from Alphabet, Amazon.com and Intel failed to clearly show returns on AI investment. A portfolio manager who invests mainly in U.S. tech stocks said, "The key is the credit rating—it really matters. If Anthropic does not receive an investment-grade rating, its credit costs will jump. That's good for no one." Anthropic has not yet been rated by the Big Three agencies, S&P, Moody's or Fitch, although smaller rating agencies have assigned it junk ratings.
According to the sources cited by the FT, Blackstone now expects Anthropic's $63 billion semiconductor financing plan to still receive a junk bond rating from major credit rating agencies after the IPO. The rating would sit at the high end of the speculative-grade category. Blackstone is acting as an "anchor investor" in the financing process, which it calls the "North Star Plan (Project North Star)," and is helping banks sell corporate bonds to other investors.
Anthropic's S-1 prospectus, released on October 26, said the company plans to invest more than $800 billion in AI infrastructure by 2045. The company currently holds more than $112 billion in cash and cash equivalents, but even if it raises about $100 billion through the IPO, it would need substantial outside capital, including corporate bond issuance. Investment-grade status would allow it to borrow more cheaply. A junk rating would significantly limit the pool of available funds, since many insurers and pension funds restrict junk bond investments, and Anthropic would likely need to rely on debt financing involving highly rated suppliers such as Broadcom and Nvidia.
The forecast landed during a broader tech selloff. Tech stocks on the New York market fell sharply for a second consecutive day after earnings from Alphabet, Amazon.com and Intel failed to clearly show returns on AI investment. A portfolio manager who invests mainly in U.S. tech stocks said, "The key is the credit rating—it really matters. If Anthropic does not receive an investment-grade rating, its credit costs will jump. That's good for no one." Anthropic has not yet been rated by the Big Three agencies, S&P, Moody's or Fitch, although smaller rating agencies have assigned it junk ratings.
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