Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

Debt

The carrying amounts of our debt are as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Corporate – Recourse:
Revolving credit facility	$	60.0	$	—
Senior notes, net of unamortized discount of $0.1 and $0.1	399.9		399.9
	459.9		399.9
Less: unamortized debt issuance costs	(0.9)		(1.2)
Total recourse debt	459.0		398.7
Leasing – Non-recourse:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.4 and $0.5	2,412.3		2,257.5
2017 promissory notes, net of unamortized discount of $6.2 and $7.8	726.6		760.2
TILC warehouse facility	728.2		561.8
	3,867.1		3,579.5
Less: unamortized debt issuance costs	(22.6)		(23.7)
	3,844.5		3,555.8
Partially-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.4 and $0.3	1,200.7		903.5
TRIP Railcar Co. term loan	—		323.7
	1,200.7		1,227.2
Less: unamortized debt issuance costs	(10.5)		(11.1)
	1,190.2		1,216.1
Total non–recourse debt	5,034.7		4,771.9
Total debt	$	5,493.7	$	5,170.6

Estimated Fair Value of Debt – The estimated fair value of our 4.55% senior notes due 2024 ("Senior Notes") is based on a quoted market price in a market with little activity (Level 2 input). The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs). The respective carrying values of our revolving credit facility, 2017 promissory notes, TILC warehouse facility, and TRIP Railcar Co. term loan approximate fair value because the interest rate adjusts to the market interest rate. The estimated fair values of our debt are as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Level 1	$	1,514.8	$	1,645.7
Level 2	381.5		420.8
Level 3	3,284.8		3,215.4
	$	5,181.1	$	5,281.9

Revolving Credit Facility – We have a $450.0 million unsecured corporate revolving credit facility. In July 2022, we amended our revolving credit facility to extend its maturity date to the earlier of (i) July 25, 2027 or (ii) July 2, 2024 if our Senior Notes have not been repaid in full by that date.

During the nine months ended September 30, 2022, we had total borrowings of $545.0 million and total repayments of $485.0 million under the revolving credit facility. Additionally, we had outstanding letters of credit issued in an aggregate amount of $4.9 million. Of the $385.1 million remaining unused amount, $264.1 million was available for borrowing as of September 30, 2022. The majority of our outstanding letters of credit as of September 30, 2022 are scheduled to expire in November 2023. Our letters of credit obligations support performance bonds related to certain railcar orders. The revolving credit facility bears interest at a variable rate of Secured Overnight Financing Rate ("SOFR") plus 2.35%, for an all-in interest rate of 5.34% as of September 30, 2022. A commitment fee accrues on the average daily unused portion of the revolving credit facility at the rate of 0.175% to 0.40% (0.35% as of September 30, 2022).

The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. In July 2022, we amended our revolving credit facility to increase the maximum leverage ratio to provide additional flexibility. As of September 30, 2022, we were in compliance with all such financial covenants.

TILC Warehouse Loan Facility – TILC has a $1.0 billion warehouse loan facility, which was established to finance railcars owned by TILC. During the nine months ended September 30, 2022, we had total borrowings of $554.1 million and total repayments of $387.7 million under the TILC warehouse loan facility. Of the remaining unused facility amount of $271.8 million, $142.1 million was available as of September 30, 2022 based on the amount of warehouse-eligible, unpledged equipment. In August 2022, we amended our warehouse loan facility to transition the facility benchmark rate from LIBOR to SOFR plus a benchmark adjustment. Advances under the facility bear interest at one-month term SOFR plus (1) a benchmark adjustment of 11 basis points and (2) a facility margin of 185 basis points, for an all-in interest rate of 4.48% at September 30, 2022.

TRL-2022 – In April 2022, Trinity Rail Leasing 2022 LLC, a Delaware limited liability company ("TRL-2022") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of $244.8 million of its Series 2022-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2022 Notes"). The TRL-2022 Notes bear interest at a fixed rate of 4.55%, are payable monthly, and have a stated final maturity date of May 20, 2052. We incurred $2.6 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2022 Notes. The TRL-2022 Notes are obligations of TRL-2022 and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets to be acquired and owned by TRL-2022. Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2022 Notes were used to repay approximately $209.9 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

Tribute Rail – In May 2022, Tribute Rail, an indirect, wholly-owned subsidiary of TRIP Holdings, issued an aggregate principal amount of (i) $290.0 million of its Series 2022-1 Class A Green Secured Railcar Equipment Notes (the “Class A Notes”) and (ii) $37.0 million of its Series 2022-1 Class B Green Secured Railcar Equipment Notes (the “Class B Notes”) (the Class A Notes and the Class B Notes are, collectively, the “Tribute Rail Notes”). The Class A Notes bear interest at a fixed rate of 4.76%, and the Class B Notes bear interest at a fixed rate of 5.75%. The Tribute Rail Notes are payable monthly and have a stated final maturity date of May 17, 2052. We incurred $3.4 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the Tribute Rail Notes. The Tribute Rail Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings, and are secured by Tribute Rail's portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by Tribute Rail.

Tribute Rail used the proceeds from the sale of the Tribute Rail Notes to purchase railcars and related operating leases from TRIP Railcar Co. TRIP Railcar Co. used the proceeds from Tribute Rail to repay its outstanding term loan agreement due June 2025, of which $319.4 million was outstanding at the redemption date. In connection with the redemption, we recognized a loss on extinguishment of debt of $1.5 million, which related to the write-off of unamortized debt issuance costs. This write-off is reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the nine months ended September 30, 2022.

Each of our secured railcar equipment notes, including the TRL-2022 Notes and the Tribute Rail Notes, generally has an anticipated repayment date and a stated final maturity date. While the stated final maturity date of these notes is in 2052, the cash flows from the encumbered assets of each of TRL-2022 and Tribute Rail will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances. If the cash flow assumptions used in determining the targeted balances are met, it is anticipated that the notes will be repaid well in advance of their stated final maturity date. There can be no assurance, however, that such cash flow assumptions will be realized. If these notes are not repaid by the anticipated repayment date, the respective interest rates on these notes would increase from the fixed rates stated above.Terms and conditions of our other long-term debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 8 of our 2021 Annual Report on Form 10-K.