00:00Let's get more on this debt deal now with Bloomberg private credit reporter Emily Graffaio and I told us about
00:05the structure of this deal. It's a fascinating deal and has I don't know how many participants all sorts of
00:11levels to this deal and an SPV. What more could you want. Yeah there's a lot going on in this
00:17deal that we've been reporting out. But essentially it's one of the largest private credit deals ever. Apollo and Blackstone
00:23are coming together to basically create this SPV that then is going to raise
00:29debt from both Apollo and Blackstone but also other investors. The money is going to be used to purchase chips
00:37semiconductor chips that power AI. This most recent capital raise specifically will first be used by Anthropic. So Anthropic will
00:46lease the custom chips that Google and Broadcom have partnered to create. If you zoom out a bit what it's
00:54basically showing us is that chips are really expensive and Wall Street needs to come up
00:59with these very creative financing structures to be able to create the money to buy chips for AI. Yeah. And
01:07I was looking with a third tier you're getting something like an eight and a half percent coupon. How does
01:11that compare to sort of other corporate offerings. Yeah. So there's three different tranches in this debt. The first two
01:18are investment grade like mid investment grade and they're backed by Broadcom. That third tranche the B tranche what we're
01:26calling it has about an eight point five percent.
01:29yield. That one's not backed by Broadcom. So there's a little bit of a maybe safer rating in the first
01:38two and then if you want maybe a little bit more risk. Yeah absolutely. You're in that B tranche. Now
01:43Apollo and Blackstone coming together on this. I mean these are the major players. Will we see smaller players trying
01:49to do maybe smaller deals or will they just eat up all of the supply here. The big players.
01:54Yeah. I mean that's a good question Bonnie. It's definitely like you would expect that the largest alternative asset managers
02:02come together and create a deal of this size. What we know also is that they are going to be
02:08keeping roughly half of this thirty five billion dollars and then they'll syndicate it out to other investors.
02:16It's not too different than what we saw last fall with the Morgan Stanley beignet meta deal. This is kind
02:22of similar where there's like an SPV involved. There's a tech backstop and there's some private credit involved.
02:28Yeah. Well everybody. Now would this be the type of thing that banks would pass on and would just not
02:33consider themselves suited to or will we also see banks getting involved in this.
02:38I think we'll see banks getting involved at least for this one. There was Morgan Stanley did help arrange the
02:43transaction and it was advised by Morgan Stanley.
02:46And then I don't have it in front of me but I know there was at least one of the
02:49tranches the A1 tranche that was sold to banks.
02:54You might imagine that then some of that they syndicate out. So there is still a bank involvement. But the
03:01headline here is there's a huge financing and
03:04the the alternative asset managers are doing it. It's Blackstone. It's Apollo. Exactly. Now the syndication that goes out to
03:10other investors.
03:11I mean will there be endless appetite for that. Can we see you know an unlimited amount of syndicated you
03:18know financing here for for investors that might be interested.
03:22I mean we'll have to see this again. The Broadcom backstop involved in some of the tranches might entice some
03:29investors to get involved.
03:30But this likely isn't the only AI financing that will. Exactly. Exactly. There's a lot of data center debt that's
03:37already been raised.
03:38This is a little bit different because it's chip financing. So there could be more of that coming down the
03:44pipeline for this year.
03:45So you have to imagine investors might get some they might be discerning if they don't want this deal.
03:49They know you know one's coming in just a few weeks. Why take this one.
03:53Now Broadcom backstops the chip part of it. Is there any possibility at all that Broadcom runs into trouble or
04:01that it loses a client and then maybe it finds it a little bit more difficult to sort of make
04:06good on those lease agreements or what have you?
04:09I'm not exactly sure how that would play out if there were if Broadcom were to run into trouble.
04:15At least what we know right now is that Anthropic is going to be leasing those the chips that Broadcom
04:21and Google create right now.
04:24Anthropic needs a lot of these chips. Yes. You know whether or not they continue to need the chips indefinitely
04:31is certainly an open question.
04:32It didn't require people that ask us coffee.
04:32You know they as a beer that I can't paper on, you know.
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