Broadcom’s Debt Deal Could Reach $100 Billion in the AI Buildout’s Latest Mega-Financing

Broadcom Inc. (NASDAQ:AVGO) is reportedly in talks to raise a staggering $70 billion to $80 billion in debt for an AI-focused financing deal that could reach $100 billion once all components are considered. The proposed structure involves two tranches: a junior tranche of $30 billion to $35 billion and a senior tranche, which is repaid first and estimated to be between $45 billion and $70 billion.

This financing is part of a platform Broadcom unveiled in June to enable 20 gigawatts of AI computing capability, equivalent to 20 nuclear power plants. Apollo and Blackstone are leading the financing efforts, with Broadcom backing portions of the senior debt to achieve investment-grade ratings and lower borrowing costs. The expansion in credit default swaps, which insurance against Broadcom defaulting on its debt, has widened alongside the funding talks.

Hedge fund ownership of Broadcom has also decreased slightly, though the equity market has shown a relatively muted reaction. The potential $100 billion financing round could significantly increase Broadcom's credit exposure, as it supports the AI buildout for companies like Anthropic and OpenAI. The contrasting reactions between credit and stock markets suggest that bond market participants are increasingly cautious about Broadcom's default risk, despite the relatively stable stock performance.

Investors should closely monitor the final financing structure and the widening credit default spreads, as these could indicate growing concerns about the sustainability of this AI-driven leverage.