Assured Guaranty Ltd. dropped its internal rating on its Brightline Florida bonds to below-investment grade while saying the insurer remains bullish on the future of the passenger train line.
Assured downgraded Brightline during its third quarter to BB-plus from BBB-minus, a move that puts it in a "below investment grade I" category that includes heightened surveillance. The decision comes as the intercity express line has struggled to meet ridership and revenue projections and alarmed some investors by
Assured wraps $1.13 billion, or 51%, of the $2.219 billion of senior bonds
"Brightline, as you know, is a new operation," Assured CEO and president Dominic Frederico said Friday during a question-and-answer period on the company's third-quarter earnings call. "They're having the total growing pains of a startup. They had a problem with both the choice of the lines and the number of the cars you're able to put on the availability for service," Frederico said. "So, in terms of our view of it, they're having the typical growing pains as they get better at their management of both availability and route structure, [and] it will basically work itself out."
Frederico said the firm is "very comfortable" with Brightline in light of the insurer's position. "You remember we're in the senior most section of the capital stack," he said. "Significant equity and subordinated debt is beneath us."
The CEO said Assured also remains bullish on its exposure to the Puerto Rico Electric Power Authority. "We think we're in a very preferred position relative to being a creditor" based on past legal rulings on bondholder liens, Frederico said in response to an analyst's question about Puerto Rico.
"We've been steadfast in our direction, in our view that we're going to defend our legal rights," he said. Referring to previous legal decisions or negotiated settlements on unrelated credits that were positive for the company, Frederico said the company is "four for four. And I don't expect to go four for five."
"He sounded more positive on that call [about PREPA] than I've heard before," said Puerto Rico Clearinghouse Principal Cate Long. "They seemed to be hesitant in other calls in predicting the outcome of their legal rights but now they seem pretty confident."
In other third-quarter earnings news, Frederico said the firm continued to benefit from record-high muni bond issuance and "strong investor demand for our municipal bond insurance, including from institutional investors on some very large infrastructure transactions."
Assured's gross par written totaled $7.85 billion during the third quarter of 2025 compared to $5.38 billion during 3Q 2024. For the first nine months of 2025, the firm insured $20.98 billion compared to $15.34 billion during the same period last year and wrapped 63% of the total insured U.S. municipal market par sold in nine months 2025.
The muni market's second-leading bond insurer, BAM Mutual, also rode the wave of bond volume to strong third quarter results, the firm said Monday. BAM insured $6.13 billion of new-issue transactions in the third quarter, up 38% from 2024. The firm guaranteed a record-high $14.75 billion of muni bonds in the first nine months of 2025, up 9.5% from the same period in 2024.
BAM remains the leader in the secondary market, with $1.05 billion par insured, up 78% from Q3 2024.
"BAM's results reflect increasing demand for our guaranty from institutional and retail investors who use it in the primary and secondary markets to strengthen their portfolios' credit quality and diversification, liquidity, and ratings stability," said BAM CEO Seán McCarthy in a statement. "Investor demand is supporting an increase in utilization by issuers nationwide, particularly on larger transactions and higher-rated deals, as well as in sectors that were less-frequent users of insurance, like public power."
Municipal bond insurance volume
