This Financial Edge column from the March 2026 issue is a topic recommended by Eric Marchetto, Chief Financial Officer of Trinity Industries Inc., and is a companion to a Railway Age Rail Group On Air podcast with Marchetto (below).
Pick up a newspaper today that devotes itself to any business coverage and you’re going to be quickly overwhelmed by two topics. The first is AI and the second is the world’s obsession with the availability of and need to deploy what feels like an ocean of capital that seems to exist in the world’s markets today.
In the 2026 Railroad Financial Desk Book, the correlation between availability of capital and increasing asset valuations was drawn. If anything, the correlation for rail assets is just one piece of a larger puzzle that includes stocks, companies and fixed income investments (bonds). One doesn’t have to reach very far to see how the abundance of capital is impacting business. There’s Google’s 100-year bond (following in the steps of Norfolk Southern, Ford and Motorola), the currently limitless appetite for high yield bond debt, and the surge in private lending.
This leads us to North American rail. The abundance of capital chasing investment opportunities in rail spans the industry from railroads to maintenance and repair to—what else?—railcars and locomotives. However, for industry veterans, the current era’s investment patterns differ from historical investment interest. Formerly, highly structured tax-affected (often leveraged) leases and Equipment Trust Certificates (ETCs, a sophisticated word for a well-collateralized loan) were the investment products of choice for asset acquisition and finance.
During this time, shorter term operating leases were the province of a handful of investors taking above average risk and receiving above average, but occasionally slightly erratic, returns that followed the cyclicality of the rail equipment marketplace.
Eric Marchetto notes that today’s capital “stack” (to use an I-bank word) looks very different. (Yes, this is not your father’s capital stack.) One difference is the types of capital coming into the rail market today, including long horizon passive capital from infrastructure funds and insurance companies. These are potentially very large investors that can use one billion in equity to buy three to four billion in railcar assets.
Furthermore, there are shorter-term investors (think PE firm Apollo) that are repackaging rail asset backed loans as collateralized debt obligations (CDOs) parsing out portfolios into credit-rated tranches.
This is all in the shadow of an industry expected to build 25,000 railcars in calendar year 2026. At the Railroad Financial Corporation and FTR Intel Houston Railcar Symposium in November 2025, Marchetto asked a room full of companies that move freight by rail if they intended to grow their railcar fleets in 2026. Very few rail shippers saw a need for that. Contrast that against the investment community, where every railcar lessor and investor is looking for more growth in a year where new builds are contracting.
What do these investors love about rail? Marchetto notes that “rail assets represent an attractive risk-adjusted investment.” There is low default risk, and the long-lived nature of railcars represents an inflation hedge. Marchetto sees directly and anecdotally, especially after the GATX / Brookfield acquisition of the Wells Fargo fleet, more funds looking to get into the rail equipment leasing business. He sees growing demand from these investors looking for attractive returns. Think of the HALO (Heavy Assets Limited Obsolescence) trade that is currently a theme with investors looking for AI disruption alternatives.
Additionally, investors see an opportunity for steady and consistent returns in the railcar leasing space. Think of it this way: While many railcar owners may feel that post-COVID railcar prices have risen dramatically, Marchetto notes that new railcar prices have risen 3% to 4% annually over the past 20 years.
Contrast this against lease rates that have risen 1% to 2% over the same 20-year period. This gives conviction in the long-term returns and the opportunity for lease rates to continue to increase to match the rise in asset value. Couple that with the abundance of liquidity available in today’s market, which when it gets deployed will have to assume that lease rates will rise in the future to justify paying today’s prices.
Also add the uplift in railcar investment from the 100% bonus depreciation made available to investors in the 2025 tax bill. This makes for a rather compelling investment thesis when you are looking to deploy capital and generate attractive risk-adjusted returns.
Expectations are that more capital will move into railcars. This topic will be on the forefront of investor mindsets throughout 2026. Listen to the podcast for additional insight!
Got questions? Set them free at dnahass@railfin.com.
