(Oct 27): Anthropic PBC warned it may need to seek more financing sooner than the artificial-intelligence company had anticipated while saying little about its potential path to an investment-grade credit rating in its closely watched IPO filing.

Reaching investment grade could give the maker of Claude access to a much deeper pool of capital at a time when its funding requirements are ballooning. Insurance companies, pension funds and other large investors are major buyers of high-grade corporate bonds, and attaining those ratings could allow Anthropic to borrow more cheaply.

SpaceX provides a recent road map for how quickly a newly public technology company can graduate into the high-grade debt market. When Elon Musk’s company prepared to go public earlier this year, SpaceX said in its filing that it aimed to “maintain an investment grade credit rating”, and it quickly achieved that grade from Moody’s Ratings, S&P Global Ratings, and Fitch Ratings. The company followed its IPO with a US$25 billion investment-grade bond deal in June, which immediately traded down so much that it stunned lenders. Potential bond buyers are waiting to see Anthropic’s plans.

While Anthropic’s filing doesn’t outline its investment-grade ambitions so clearly, it is shedding new light on the company’s balance sheet, including US$6.2 billion of current debt as of June 30 in the form of convertible promissory notes to Amazon.com Inc., a type of bond that can be converted into equity rather than paid back in cash — and the capacity to borrow tens of billions more.

The documents also reveal details about a five-year US$15 billion revolving credit facility provided by a group of banks led by Morgan Stanley in a September transaction, which increased the size of the package from about US$3 billion earlier. The deal included guarantees and security interests that would be released if Anthropic wins an investment-grade rating from at least two of the three main credit graders. So far, Moody’s, S&P and Fitch have yet to publish their ratings.

A representative for Anthropic declined to comment.

The revolving credit facility would carry interest rates that vary depending on the company’s rating, the filing showed. Those rates could go from 0.75 percentage point over an underlying benchmark rate for an A credit rating to 1.25 percentage points for a BBB- rating, the lowest of investment grade.

“The state of Anthropic is they have very strong liquidity and extraordinary future obligations,” said Tony Trzcinka, an investment-grade portfolio manager at Impax Asset Management Group. “The balance sheet supports an investment-grade rating at today’s leverage. However, the rating will come down to how the rating agencies view the commitment schedule, short operating history and circular counterparty relationships.”

Facing massive spending plans to quickly grow its models and compete with the likes of OpenAI, Anthropic has been relying on Broadcom Inc. to backstop transactions where a special corporate entity raises debt to buy chips, which are then rented to Anthropic. The first of such deals, called Big Sky, raised US$35 billion, most of which was supported by Broadcom and received an investment-grade rating. On Monday, Broadcom announced another deal worth US$63 billion to finance the purchase of chips for Anthropic to rent.

Whether through leases or actual on-balance sheet borrowing, the fundraising is just beginning for Anthropic. The company has the option to borrow another US$77 billion of promissory convertible notes, if it so chooses, from Amazon, Broadcom and Alphabet Inc.’s Google. 

Meanwhile leases not yet commenced, primarily related to compute and infrastructure capacity, jumped to US$321 billion as of the end of June, up from about US$50 billion at the end of December. The sheer scale of those obligations makes Anthropic’s eventual credit standing increasingly important.

Uploaded by Isabelle Francis