Virgin Rail (Brightline) IPO, Bonds, Success, Branding

This is a forum for all operations, both current and planned, of Virgin Rail USA formerly known as Brightline, and Virgin Worldwide Rail operations, past and present.
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gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Mon Jun 24, 2019 7:01 pm

Well that's even more reassuring.

Ok Mr. Norman, ... A major U.S. rating agency is now rating a passenger rail service private bond issue as not only investment grade but "of the highest quality".

Thoughts?
gokeefe

Gilbert B Norman
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Gilbert B Norman » Mon Jun 24, 2019 9:22 pm

Astounded :-D

How the first rating agency, Fitch, says they're junk and now Moody's says they are investment grade.

Something doesn't add up.

JimBoylan
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by JimBoylan » Tue Jun 25, 2019 5:58 am

Does the rating agency charge the issuer a higher price for a better rating? I heard rumors of this 11 years ago for mortgage securities.

Ridgefielder
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Ridgefielder » Tue Jun 25, 2019 12:04 pm

JimBoylan wrote:
Tue Jun 25, 2019 5:58 am
Does the rating agency charge the issuer a higher price for a better rating? I heard rumors of this 11 years ago for mortgage securities.
The pre- and post-2008 worlds for the ratings agencies are so different as to be unrecognizable. Whatever shenanigans they may have gotten up to back then, the regulators put the fear of God into a whole generation of agency executives and analysts in 2009-11.

I haven't looked at this specific report but in general when say Moody's and Fitch differ widely in their assessment of a credit it's because of differing institutional views of the legal structure of the credit-- parent company guarantees, that sort of thing.

Gilbert B Norman
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Gilbert B Norman » Tue Jun 25, 2019 1:46 pm

You said it Mr. Boylan.

CDO's and other mortgage backed securities - all AAA with any agency. After all, Lehman Brothers issued them!!!! :P :P :( :(

gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Tue Jun 25, 2019 7:43 pm

Best explanation yet ... (buried at the end)

Virgin trains executive basically said that due to a lack of "comps" they weren't able to get a rating (at least initially).
gokeefe

gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Tue Jun 25, 2019 7:48 pm

Gilbert B Norman wrote:
Mon Jun 24, 2019 9:22 pm
Something doesn't add up.
Mr. Norman,

I will say that at the moment in spite of the first available explanation I remain unsatisfied. If Moody's can give this rating comfortably I don't see why Fitch would be unable to do so.
gokeefe

nctrains
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by nctrains » Wed Jun 26, 2019 9:04 pm

I'm not an expert on bonds but I think this fixed income news update from Fidelity clears up some of the discrepancies everyone has pointed out.

At a high level, it appears that Virgin Trains did not need to issue this last bond issuance ($950MM) but did so in order to comply with federal requirements on the Private Activity Bonds (PABs); if Virgin did not issue the entire amount permitted by the U.S. Department of Transportation, then they may not be eligible for any PABs in the future. The bonds have a "mandatory tender of March 17, 2020" which I'm guessing means that the $950MM in principal will be returned to the bondholders at that time.

Because Virgin is simply issuing bonds to comply with this requirement, I'm guessing they structured it so they can have an almost checking account-like interest rate of 1.95% (they may indeed just be placing the loaned amount in a checking account :-) ). As for the credit agencies, I'm guessing that the investment grade credit ratings were specifically rated for this bond issuance.

electricron
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Re: Carl Hiassen calls Miami to Orlando plan "crazy" and says Branson has lost his marbles

Post by electricron » Thu Jun 27, 2019 2:31 am

phillyrube wrote:
Mon Jun 24, 2019 9:35 am
This odd, indirect route has angered many residents of Indian River and Martin counties, through which the high-speed trains are scheduled to pass 32 times a day. Those seeking to block the project cite noise and safety concerns, plus the potential hindrance to first-responders stuck at railway crossings.

If it's a high speed train, how long can it take to cross a highway?
The gates should start dropping 30 seconds before the arrival of the train, and will not start rising until after the train has passed. So potentially the gates could be down for about a minute - assuming the train is at speed and is not slowing down for stop signal.

It is not the responsibility of the railroad to build new highway overpasses or underpasses of an existing railroad, that's the responsibility of local, state, and federal governments. But it is the responsibility of the railroad to build overpasses and underpasses of an existing highway when laying and building a spanking brand new rail corridor.

There is nothing preventing these local cities and towns building new overpasses over the existing railroad corridor, except lack of vision. Frankly, they should have done so decades ago if they were worried about first responder delays at the railroad crossings, because freight trains can take minutes to cross an intersection.

Ridgefielder
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Ridgefielder » Thu Jun 27, 2019 4:21 pm

gokeefe wrote:
Tue Jun 25, 2019 7:48 pm
Gilbert B Norman wrote:
Mon Jun 24, 2019 9:22 pm
Something doesn't add up.
Mr. Norman,

I will say that at the moment in spite of the first available explanation I remain unsatisfied. If Moody's can give this rating comfortably I don't see why Fitch would be unable to do so.
The issuer pays for the ratings. This bond issue is probably only being bought by a dozen or so major institutions. No point paying for more than one rating if the buyers only need one.

Gilbert B Norman
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Re: Virgin Rail (Brightline) IPO, Bonds, Success, Branding

Post by Gilbert B Norman » Fri Jun 28, 2019 8:05 am

Mr. Smith has suggested I pose the question that I placed at the other related topic:

What has been gained by having Branson "horn in"?

Simply because I'm not swayed by celebrity endorsements, does not mean same for others. It also seems that a carefully marketed brand was all simply for naught, replaced by confusion: "Is it Brightline or Virgin"?

Thoughts.

Jeff Smith
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Re: Virgin Rail (Brightline) IPO, Bonds, Success, Branding

Post by Jeff Smith » Fri Jun 28, 2019 8:59 am

I concur to an extent; Brightline was a known name, and I still call it that. Yet Branson is also well known, and could be the ticket to expansion.
Next stop, Willoughby
~el Jefe ("Jeff Smith Rules") :: RAILROAD.NET Site Administrator/Co-Owner

Ridgefielder
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Re: Virgin Rail (Brightline) IPO, Bonds, Success, Branding

Post by Ridgefielder » Fri Jun 28, 2019 11:40 am

Gilbert B Norman wrote:
Fri Jun 28, 2019 8:05 am
Mr. Smith has suggested I pose the question that I placed at the other related topic:

What has been gained by having Branson "horn in"?

Simply because I'm not swayed by celebrity endorsements, does not mean same for others. It also seems that a carefully marketed brand was all simply for naught, replaced by confusion: "Is it Brightline or Virgin"?

Thoughts.
BrightLine was a known brand to us, and known within Florida.

Virgin, and Sir Richard, are known to the general public. And also to the investing public. Sir Richard can appear on CNBC, Bloomberg TV, etc whenever he cares to, talk about whatever he wants, and be taken seriously. If you're a company looking for investors to fund capex, having him on board is valuable. Gets the project a second look that it might not otherwise get.

gokeefe
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Re: Virgin Rail (Brightline) IPO, Bonds, Success, Branding

Post by gokeefe » Fri Jun 28, 2019 5:27 pm

I concur with this analysis. It's a very strong endorsement by an experienced operator. People in this forum might nitpick British vs. North American passenger operations but major investors likely believe that Virgin can readily distinguish between the two.
gokeefe

Jeff Smith
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Re: Virgin Rail (Brightline) IPO, Bonds, Success, Branding

Post by Jeff Smith » Sat Jun 29, 2019 4:25 pm

Although not really railroad-related, it was the impetus for Brightline: https://www.bizjournals.com/southflorid ... s-usa.html
Florida East Coast Industries has completed Park-Line Palm Beaches, the first apartment tower at a Virgin Trains USA station.

The 26-story tower, at 591 Evernia St., is next to the station for the passenger rail line connecting West Palm Beach to Fort Lauderdale and Miami. An extension to Orlando recently broke ground. FECI is the majority owner of Virgin Trains USA, formerly known as Brightline.

Park-Line has 290 apartments and 14,000 square feet of ground-floor retail. The units range from 495 to 1,751 square feet and lease from the $1,500s to the $3,800s. There’s also a 1,961-square-foot penthouse with a wraparound terrace that’s listed for $7,900.
...
Next stop, Willoughby
~el Jefe ("Jeff Smith Rules") :: RAILROAD.NET Site Administrator/Co-Owner

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