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An ambitious plan to build a high-speed railway between Las Vegas and Southern California has been .

The troubled project, which is being spearheaded by an outfit called Brightline Holdings, would be only the second privately-held, inter-city rail line in the U.S. (Brightline operates a 70-mile line between Miami and West Palm Beach).

According to Brightline, the train would ultimately capture more than 20% of the 50 million one-way trips that are made between California and Las Vegas each year - 85% of which happen by car or bus.

Investor Hangover: To finance the project, Brightline secured rights to sell so-called "private activity bonds," from public agencies in California and Nevada.

A type of municipal bond, private activity bonds are used to finance private ventures that benefit the public interest (in this case, enhanced access to blackjack).

Brightline was looking to raise $2.4 billion of debt (down from a prior goal of $3.2 billion) to finance the construction of a 169-mile stretch between Las Vegas and a desert town called Apple Valley (90 miles from downtown L.A.).

  • Despite "juicy" yields ranging from 7.0% to 7.5% (four times higher than highly-rated state and local bonds), investors wouldn't bite.
  • The project was put on hold and the rights to sell private activity bonds have been re-allocated to affordable housing projects.

The Takeaway: A company spokesman said the project could still move forward, but for now, there is no easy way to escape the L.A. traffic. 



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