Broadcom credit risk measures rise amid AI financing deals

In August, bond traders have raised the credit risk measures of Broadcom Inc. due to the company's involvement in providing financial backing for substantial AI-related financing deals. The yields on Broadcom's 5.15% bonds, set to mature in 2031, experienced an increase of about 14 basis points during the same period. Moreover, the company's five-year credit default swap prices saw a rise of 28 basis points, surpassing the increases observed in similar instruments held by Oracle Corp. and SpaceX.

Broadcom is currently engaged in discussions to secure more than $60 billion in debt for an AI chip financing arrangement, which is expected to support firms like Anthropic PBC and others. The company may potentially guarantee a portion of a senior-secured component within the deal, which is still under negotiation. Earlier this year, Broadcom pledged most of a $35 billion debt package.

Investors, including Apollo Global Management Inc. and Blackstone Inc., have facilitated the acquisition of custom AI chips for lease to Anthropic. This move by chipmakers, such as Broadcom and Nvidia Corp., has gained traction in 2026 as technology companies invest billions to expand their cloud-computing infrastructure. By employing guarantees and other financial support mechanisms, these companies are able to enhance their balance sheet strength and bolster their clients' purchasing power.

However, recent concerns have arisen regarding the potential risks associated with these commitments. Should an industry downturn occur, Broadcom and similar firms might be compelled to fulfill billions in pledges during periods when their own earnings may be under pressure.