Brightline West, the planned high-speed electric train between Las Vegas and southern California, is prepping $2.5 billion of unrated private activity bonds that mark the next financing step for the $12.4 billion high-profile project.
It's likely to be one of the largest unrated deals to come to the municipal market this year.
The transaction will refinance all existing bonds, generate proceeds for construction and fund reserve accounts. The company has 180 days after the deal to secure a $6 billion bank facility, which will be senior to the PABs and which may include a $1.5 billion tax-exempt tranche, as well as additional equity. If the company fails to secure the additional funds, there will be a mandatory redemption at 101, according to an investor presentation accompanying preliminary bond documents.
It's not clear when Brightline West plans to come to market. Preliminary bond documents said the team intends to supplement the documents with additional information. Lead underwriter Morgan Stanley & Co. LLC declined to comment. A spokesperson for Brightline referred The Bond Buyer to financing documents.
The borrower may tap the market for an additional $1.5 billion of PABs, according to bond documents.
DesertXpress Enterprises LLC, which does business as Brightline West and is owned by Fortress, aims to own and operate the nation's first privately owned, all-electric high-speed train. The plan is to have it running by December 2028.
The 218-mile line will mainly run along the I-15 median with fully electric trains capable of reaching 186 mph or more, according to officials, allowing for a six-hour drive to be compressed into a two-hour trip. The project
Brightline plans to begin construction early this year. After construction is complete, the company may seek investment-grade ratings for all the outstanding tax-exempt bonds, similar to last year's
One of the most prominent names in the high-yield municipal bond market along with its sister express train in Florida, Brightline West's outstanding debt is held by many of the market's top high-yield mutual funds, including Nuveen. The 2025 PABs are also offered only to qualified institutional buyers.
Bond documents show the company expects to see 8.6 million riders and generate $1.4 billion of revenue by 2031, its first stabilized year of operation.
The California Infrastructure and Economic Development Bank will act as the conduit issuer for $1.875 billion and the Director of the State of Nevada Department of Business and Industry will be the conduit for $625 million. The final maturities for both tranches is 2065.
The underwriting team includes eight additional banks in addition to Morgan Stanley. Orrick, Herrington & Sutcliffe LLP is bond counsel.
The project, along with other proposed high-speed lines, won support from the outgoing Biden administration, which prioritized development of a national high-speed rail network. While the privately owned Brightline West line has won bipartisan praise,
