>However, Anthropic’s disclosure to KBRA excluded several important financial metrics, including free cash flow and earnings before interest, taxes, depreciation and amortisation. Credit rating analysts had to come up with their own estimates based on assumptions, the documents show.

>Given the limited information, KBRA produced a “risk score” to assess Anthropic’s creditworthiness rather than the traditional full financial models.

This and the fact they went to a small ratings agency does not inspire confidence in the rating.

Let’s be clear about what this means: it gives them access to the corporate bond market. What they’re lobbying for is that pension funds, life insurance, etc., can take exposure to these companies. Suddenly the everyman, your mom and dad, have significant exposure to these companies and their circular financing deals without even knowing it. This is disgusting.

What a lot of people fail to realize is that the rules around IPOs changed since the dot com bubble. Previously, employees counted as shareholders and companies above a certain threshold of shareholders were required to IPO. This is why companies like Microsoft, Amazon, etc., had the majority of their growth while being publicly traded. This allowed the everyman with a brokerage account to participate in these gains.

These rules were essentially removed by Obama in 2012 through the JOBS act. What this means is that companies can stay private for a majority of their growth phase, which is why we’re seeing IPOs being floated with $2T dollar amounts on them. They’ve privatized the gains, and they only IPO once they want to cash out.

So let’s understand clearly what’s about to happen: early VC investors in oai/ant are going to make billions selling dogshit to your parents pension funds, your parents pension funds are run by idiots who will gleefully take the AI exposure and are legally allowed to take that AI exposure because the AI companies lobbied the credit rating agencies to allow it, and when the bills come next year and these companies are completely unable to meet their liabilities, your parents have to postpone their retirements or come back out of retirement to make ends meet.

It’s truly evil. I hope the employees at these companies with dollar signs in their eyes awaiting their multimillion dollar payoff understand the system that they’re participating in and how evil it is.

Point blank: 2008 was about manipulation of the credit rating agencies. This bubble will also be about manipulation of the credit rating agencies. Absolutely deplorable.

And no, just to nip this in the bud, AI isn’t a fad. It’s the most transformative technology of our lifetimes. It’s going to change everything. But that doesn’t have anything to do with chaos in financial markets or malinvestment during the gold rush. It has to do with whether these companies have any kind of moat and whether the billions being poured into current generation chips are going to depreciate over the timeframes that investors think they will.

BB+ is technically junk. But the it is one notch from investment grade. Also Junk ratings are normal for young. So the framing is sensationalized.

"Growth has slowed" is technically true but misleading. Q2 to Q3 still went from $11.5bn to $16.8bn. And at those levels, it’s not wildly unexpected that it has to slow down.

And the bias is obvious when they write "Despite limited disclosures" which makes it sounds suspicious, when it’s normal thatrivate companies don't publish financials.

It’s also technical errors. Broadcom agreed to support the residual value of the chips, they did not guarantee the loan.

When journalists and news organizations are this terrible at basic reporting, Within their own specialized domain, it's hard to find sympathy for their complaints about AI-generated content taking over.

Edit: after another look I found that the agency that gave the rating also is a new small one with not very good record eighter (Kroll Bond Rating Agency).

Alternative title: Small Agency, which is previously has been fined for Ratings Without Method, Guesses that Anthropic's Numbers are close to normal for startups; FT Reports the Guess as News.