Florida's Brightline passenger train is hoping to snag its first public rating ahead of a potential refinancing to lower interest rates on a chunk of project revenue bonds.
The refinancing, expected in the next six to 12 months, comes after the express train hits a key milestone later this summer when it launches service on its long-awaited extension to Orlando, a key piece of revenue-generating part of the project.
Brightline Trains Florida LLC, which is owned by Fortress Investment Group, began operations in 2018 between Miami and West Palm Beach. The extension, which achieved major completion last week, promises a speedy 235-mile ride between downtown Miami and tourist-laden Orlando International Airport.
The company plans to eventually run to Tampa, seeking federal infrastructure grants along the way to fund the extensions. Meanwhile, Brightline is working with Miami-Dade, Broward and possibly Palm Beach Counties to hammer out agreements to provide commuter service for the counties.
The speculative-rated project
The company is expected to refinance 2019A and 2019B bonds that carry interest rates up to 7.375%. A public rating, even if it is below investment grade, would likely help achieve lower interest rates.
The 2019 bonds have traded up in recent months. A tranche of the Florida Development Finance Corporation Surface Transportation Facility Revenue Bonds, Series 2019A due in 2049 with a 6.375% coupon sold on June 29 for 96.5, up from 95.75 in May and 89 in October 2022, but still down from 102 in October 2021 and $100.8 in May 2021.
Brightline may also take out bonds issued in 2022 and 2023, which are currently covered by capitalized interest payments, and replace them with newly-rated investment grade bonds that will be backed by annual payments from the counties that are paying the train for the commuter service, according to a source familiar with the company.
In its quarterly report, the company said it expects "key economic terms with Miami-Dade County to include $50 million in upfront payments and annual access payments for 30 years starting at $12 million annually that we expect to be monetized through securitization."
Debt service payments over the next five years total $208 million in 2023, climb to $379 million in 2024 and then decline to $217 million in 2025, $233 million in 2026 and $222 million in 2027, according to the quarterly report.
Nuveen is the top investor in the Brightline Florida debt, holding $2.5 billion, or 75% of the outstanding debt. The debt, which matures in 2049, accounts for four of the top 10 positions in Nuveen's High Yield Municipal Bond Fund. The investment firm is
There will be 16 daily round trips with hourly departures between Miami and Orlando, the company said.
"This is a tremendous moment for our community. We have watched the construction progress, looking forward to the day when we would see trains pass us alongside the highway. That day is here," Orange County Mayor Jerry Demings was quoted as saying in local reports during a press conference announcing the Orland extension completion.
In related news, a proposed Brightline West passenger train from southern California to Las Vegas won a $25 million federal infrastructure grant last week to fund final design and construction of two intercity passenger rail stations in Hesperia and Victory Valley. The Brightline West project
And Fortress Investment Group
