Las Vegas to California High-Speed Train Derails Again, Bonds Fail to Sell
Posted on: November 2, 2020, 10:13h.
Last updated on: November 2, 2020, 11:18h.
The Las Vegas to Southern California high-speed train project is once again being put on hold. That’s after $3.2 billion of debts to be issued through bond sales failed to attract investors.
Fortress Investment Group owns Brightline Holdings. Brightline is the developer of the proposed $8 billion rail project that would initially run from Las Vegas to Victorville, Calif. The company said over the weekend the bond offering was unsuccessful. The debt was to be issued through $2.4 billion in bonds backed by California and $800 million from Nevada.
Bloomberg reports that Morgan Stanley, which was handling the bond offering, pitched corporate junk-bond buyers and international investors. Prospective yields on the bonds were to range from 7-7.5 percent, with maturity in 2050. That’s an excessively high rate, some four times the highest rate state governments are currently paying, which highlights the risk of taking on debt for the rail development.
Proponents of the train undertaking said it would better connect Southern California with America’s gaming capital. Design plans call for Brightline trains to move at speeds upwards of 200 mph, subsequently reducing travel time and congestion on I-15.
Southern California delivers Las Vegas more visitors each year than any other region. In 2019, 18 percent of all Sin City visitors came from SoCal.
Brightline currently operates a train service between Miami, Fort Lauderdale, and West Palm Beach. The company is planning to extend its line north to Orlando and Disney, and west to Tampa.
Departing Las Vegas for Southern California on a Sunday is a frustrating and long undertaking. I-15 is often congested, and it only takes one accident to bring travel to a standstill.
A high-speed rail option, at least on paper, seems to make sense. Instead of a little under three hours in the car (in a best-case scenario) from Las Vegas to Victorville, Brightline West would reduce that travel time to 85 minutes. The train option would also be unimpeded by roadway construction or accidents.
But Brightline’s first development leg ending in Victorville drew criticism. The town is more than 50 miles by the way the crow flies to Los Angeles, and by car, takes more than an hour.
Why would anyone drive from LA to Victorville to get on a train?” asked one Casino.org reader to our earlier coverage on the concept.
“And how will that help traffic exactly? The traffic to and from Apple Valley where this ends will be the same as now,” commented another.
In Brightline’s defense, future extensions were planned from Victorville to Rancho Cucamonga in San Bernardino County, and to Los Angeles’ Union Station.
California Treasurer Fiona Ma said the bonds that were to be issued through the Brightline development will instead be used to fund affordable housing projects and other qualifying ventures.
“Unfortunately, there is not a lot of liquidity in the market, and a lot of economic uncertainty at this moment,” Ma told Bloomberg regarding Brightline. “The project is postponed until market liquidity improves.”
The train saga continues, however. Brightline spokesperson Ben Porritt explained, “We will continue to move the project forward.”
Related News Articles
Similar Guides On This Topic
Related News Articles
- January 29, 2021 — 35 Comments—
- January 28, 2021 — 7 Comments—
- January 25, 2021 — 5 Comments—