The Florida Development Finance Corporation (FDC) remarketed $985 million in bonds to finance a passenger rail project in the southern part of the state.
The bonds mature in 2057 and pay interest at a term rate of 8.25%. They carry a mandatory tender date in February 2025.
FDC will loan the bond proceeds to Brightline Florida Holdings LLC, a company best known for developing intercity rail in Florida. The line from Miami to Orlando is the only private railroad in the United States.
Brightline has plans to build high-speed rail across the country. In April, it began construction on a line that will connect Las Vegas, Nevada, with the suburbs of Los Angeles, California. In Florida, it is planning to connect Tampa to its existing Orlando infrastructure.
Investors should examine the Orlando-Tampa project in connection with the remarketing, according to the official statement accompanying the sale of the bonds. “Management believes that the Orlando-Tampa Project, once fully ramped-up, would generate millions of additional riders per year and significant incremental revenue,” the bond documents read.
But several challenges remain, including a significant reliance on third parties in the complex railroad supply chain. The bond documents list “new trade regulations” as a factor that would make procurement of supplies more difficult; Republican presidential nominee Donald Trump has proposed a universal tariff on imports.
The remarketing includes bonds that FDC sold on behalf of Brightline last year, as well as additional bonds it previously remarketed for the company. The bonds are special, limited obligations of FDC, secured by Brightline revenue.
Morgan Stanley & Co LLC served as remarketing agent on the issuance. PFM Financial Advisors LLC acted as municipal advisor.