Bond traders raise credit risk measures for Broadcom amid massive AI financing push

Broadcom’s credit profile is getting a serious stress test. Bond traders have pushed the company’s five-year credit default swap prices up by 28 basis points in August, while yields on its 5.15% bonds maturing in 2031 have climbed roughly 14 basis points. Both moves outpace what competitors like Oracle and SpaceX have experienced over the same period. The catalyst: Broadcom is negotiating a debt package in the range of $60 billion to $80 billion, with the potential to balloon to $100 billion, all structured to finance AI chip purchases for major clients including Anthropic. The financing structure raising eyebrows Broadcom is using special-purpose vehicles, essentially standalone legal entities created to isolate financial risk, to backstop AI chip financing for its customers. The debt is reportedly split into two tranches. A senior piece worth roughly $45 billion sits at the top of the capital structure, while a junior tranche of about $35 billion absorbs losses first. What makes this particularly interesting to credit analysts is the residual-value guarantees embedded in the structure. Broadcom is essentially promising that the AI chips and infrastructure financed through these S...