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.