00:00Let's get more on that Broadcom debt deal. Joining us now is Ed Ludlow. Ed, just another monster
00:05debt deal in the works for them. Yeah, but it's not as simple as Broadcom borrowing, right? So
00:11if you do scale it back, it's $100 billion potentially total, $60 to $70 billion in senior
00:17secured debt, $30 billion in junior debt, where Broadcom basically backstops the senior debt.
00:23But the next bit that happens based on our reporting is that essentially an SPV gets set
00:30up and buys the infrastructure and the investors and lenders finance that SPV and Broadcom gear
00:41gets purchased and leased out to an end tenant. It's very similar to the proposal that NVIDIA put
00:45together with those six Wall Street firms, right? And it's all the idea that it just lowers the bar
00:51to financing what is required for AI infrastructure at scale. So many people have pointed to this sort
00:57of thing, Ed, this off-balance sheet financing is something to be concerned about. Does it just
01:01necessarily mean that when you look at corporate debt markets, it doesn't truly capture the amount
01:06of debt that these companies are taking out because so much of it is now shifted to these more unique
01:11structures they're putting together? Yeah. Again, it's not as simple as to say, well, Broadcom's
01:17borrowing $100 billion. And when the NVIDIA Wall Street agreement came out last week, a completely
01:22separate story, I understand, the reason that people were sort of calmer about the circular
01:27financing concern is that those six Wall Street firms are just a conduit to getting together
01:34third-party capital. So it's debt that underpins it. And as Robert Shippen at BI would tell you,
01:40like the debt investor is very willing right now, there's appetite, whether that is the tech companies
01:46offering themselves directly or this unusual mechanism that we're still learning about.
Comments