Blackstone now expects Anthropic to land a high junk rating after its IPO
Anthropic to receive high 'junk' rating from credit agencies following IPO
Anthropic is expected to receive a high "junk" credit rating after going public, according to the Financial Times. Blackstone, the anchor investor in a $63 billion deal to finance Anthropic's chips, told investors it now forecasts a double-B rating — the top tier of speculative grade — reversing its earlier claim that the Claude maker would earn investment grade before 2027. A junk rating would make raising money costlier for a lab already on a heavy compute spending spree.
Previously, the FT notes, Blackstone had said the opposite: that the Claude maker would receive an investment-grade rating (indicating low risk for lenders) before 2027 rolls around.
- themightyquinn
I often find myself thinking “is/was there a better business than google search ads?” A majority of users on the internets eyeballs with insane margins/low capx. While search seems cannibalized by chats, is the outcome just a fundamentally worse business? Can you get better than cheap infra serving ads to a majority of the Internet with an essential monopoly?
- nkurz
I feel even a "high junk" rating for debt issued by an LLM company is far too generous. A bond rated "BB" by S&P would be typical of the safest of the junk bonds. Historically, such bonds have about a 10% risk of default over 10 years: https://investmentgrade.com/bond-ratings/
While I'm willing to believe that Anthropic common stock might somehow be a reasonable investment because it might go "to the moon", it seems obvious that this is a high-risk bet. This is shaping up to be a winner-take-all industry. Does anyone really think there is a 90% chance that Anthropic will be that winner?
If you thought there really was only a 10% chance that they'd fail to be in business in a decade, why wouldn't you just buy their common stock and hope for a 100x return? How do the rating agencies justify this degree of confidence in Anthropic's ability to repay these debts? Or do I somehow misunderstand what these ratings mean?
- A_D_E_P_T
It's a memestock.
Think about it. Google's latest Gemini AI is just behind Anthropic's best offering -- or, in fact, it may be slightly superior. Google also has dozens of other mature, cash-cow businesses, massive infrastructure, their own hardware accelerators, an army of smart technical staff... and leadership that, for all its faults, isn't a literal cult.
Anthropic has a top-tier LLM among other top-tier LLMs. Claude is great, but not unique. Anthropic has effectively no other assets, many genuine liabilities, a downright bizarre wet-lab venture, and leadership that's... well...
So, the way I see it, either Google is massively undervalued, or Anthropic's IPO is massively overvalued. Am I somehow off base here?
- surgical_fire
It is low "junk" in our hearts
- ChrisArchitect
ICYMI OP