Banks to Offload $15B Debt for Google-Backed Anthropic Data Center as AI Build-Out Demands Surge

Morgan Stanley Leads Loan for Anthropic's Texas Campus

A consortium of banks led by Morgan Stanley is advancing plans to offload $15 billion of debt tied to a Google-backed data center in Texas that has been leased to Anthropic1

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. The financing package includes a $14 billion bridge loan and a revolving credit facility for the 2,000-acre Anthropic data center campus under construction in Hubbard, Texas4

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. Wall Street lenders are planning to tap the bond market to refinance the debt as soon as the loans are drawn, signaling growing wariness about holding AI infrastructure debt on their balance sheets1

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Nexus Data Centers, the project developer, structured the loan with a delay-draw feature that allows the company to withdraw debt over time after hitting specific construction milestones1

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. The Texas data center campus will be powered by its own natural gas power plant with 1.6 gigawatts of generating capacity to avoid delays and surging costs associated with strained power supplies in the Lone Star State3

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Google Backstops Deal with Investment-Grade Credit Rating

Alphabet's Google agreed to guarantee billions of dollars of Anthropic's lease and power-payment commitments if the AI startup defaults, using its investment-grade credit rating to backstop the transaction4

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. The guarantees cover four Anthropic data center leases and the associated power-purchase agreements tied to the on-site natural gas power plant3

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. Google's backing was limited to the minimum level required by lenders to complete the AI infrastructure financing4

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In exchange for its financial support, Google is expected to receive an equity stake of about 20% in the data center and power project3

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. This capital-efficient approach allows Google to buy into AI computing power infrastructure without tying up $15 billion in cash5

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. Google now plays four simultaneous roles in its relationship with Anthropic: competitor through Gemini, cloud and chip supplier, equity investor, and debt guarantor5

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Banks to Offload Debt Through Speculative-Grade Bonds

The bond market has become an increasingly popular avenue for colossal AI build-out demands to raise long-term capital since the market's depth means projects can be financed more swiftly and at a lower cost than through bank loans1

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. For banks, jettisoning the debt helps reduce their overall AI risk exposure and frees up capacity for more lending1

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The $15 billion debt package is expected to be split into multiple bond sales, with part of the debt potentially refinanced in the leveraged loan market1

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. The bond is expected to carry a speculative-grade rating even with Google's backstop, which only becomes effective after the Google-backed data center is fully built1

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. This means investors would have to shoulder risks including construction delays and cost overruns1

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Big Wall Street lenders have spent months seeking buyers for more than $50 billion of construction debt for several data center projects leased to Oracle earlier this year, and some lenders have sought to manage their exposure through risk-transfer deals1

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. The bank-focused market for infrastructure financing, which used to fund projects such as gas pipelines and airports, has been overwhelmed by the huge capital needs from AI build-outs1

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Tensor Processing Units and Broadcom Vendor Financing

For Anthropic's Texas campus, the AI lab intends to deploy tensor processing units co-developed by Google and Broadcom3

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. The TPUs would be funded through a separate vendor-financing agreement between Anthropic and Broadcom, with chip costs covered under a dedicated arrangement3

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. The data center will be filled with Google's custom TPU chips, which will be financed separately from the main debt package1

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Anthropic has pursued a range of infrastructure partnerships this year, including an arrangement with Advanced Micro Devices earlier this month, an agreement with Elon Musk's SpaceX in May, and a partnership with Google and Broadcom in April3

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. Google's involvement with Anthropic predates this deal. In April, Google agreed to invest up to $40 billion in the AI startup at a $350 billion valuation, building on earlier investments that included $300 million for roughly 10% stake in 2023 and an additional $2 billion shortly after3

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. Anthropic's valuation has since climbed to $965 billion in a Series H round in May, with run-rate revenue crossing $30 billion this year, up from roughly $9 billion at the end of 20255

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Contingent Liabilities and Market Implications

Merging data center and power assets can lead to complex financing since lenders need to underwrite two different kinds of risks simultaneously1

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. Project Walleye, a similar Meta-led data center with behind-the-meter power, had to offer investors additional yield to compensate for the additional risks1

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This financing structure isn't unique to Google and Anthropic. Nvidia is in talks to provide up to $250 billion in financing guarantees for a 10-gigawatt OpenAI data center campus in Ohio5

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. Both arrangements exist because neither Anthropic nor OpenAI can borrow tens of billions of dollars on their own credit, so the chip or cloud partner steps in as the guarantor lenders actually trust5

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Five-year credit default swaps on Alphabet's own debt have widened this year as bond investors price in more risk from the AI buildout5

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. Guaranteeing Anthropic's leases adds another layer of contingent liabilities onto a balance sheet the market is already watching closely5

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. If demand for AI computing power doesn't keep outpacing supply, the guarantees that make deals like this bankable today could transmit AI's financial risk directly onto the world's largest companies5

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