Brightline Trains Florida LLC suffered a fresh downgrade Thursday when S&P Global Ratings trimmed its already junk-level rating on $2.2 billion of senior, so-called Opco, debt one notch to CCC-minus.
The rating agency also downgraded $1.19 billion of Brightline East's bonds one notch, to CCC-minus from CCC. The outlook on all the debt remains negative.
After Thursday's downgrade, the issuer asked S&P to withdraw its ratings on the credit, the rating agency said in the downgrade report.
The Opco bonds that carry Assured Guaranty insurance traded hands Friday at prices between 101.5 and 99.125, according to the Electronic Municipal Market Access website. The uninsured bonds' most recent round-lot trading, on Feb. 26, saw prices between 74 and 73.5.
It's the latest in a steady march of downgrades to bruise the nation's only intercity passenger rail project that has struggled to build ridership. All the ratings agencies have warned of looming default.
In December, S&P hit the Florida passenger train with
The downgrade comes amid a "higher probability of a distressed exchange in about six months" that would be "tantamount to default" amid quickly deteriorating liquidity, S&P warned in its latest report. "The alarming depletion of the project's liquidity raises concerns around the quality of information provided," it added.
S&P forecasts liquidity will be depleted in 2026 and, after debt service, will decline to $16 million by July.
"In addition, risks remain to the downside given the limited visibility into the project's liquidity utilization after the third quarter of 2025 and the lack of quality related to the information provided by management in terms of the accuracy of their expense estimation and explanation," it said.
Analysts dialed down their rounded recovery estimate on the bonds to 0% from 5%.
"Based on the project's sustained underperformance, significant cash flow deficits, and deeply distressed debt trading prices, we believe it will likely consider undertaking a distressed exchange or redemption in the next six months," analysts said. "We would likely view any amendments that cause its lenders to receive less than they were originally promised without providing appropriate offsetting compensation as a default under our criteria."
Amendments could include a subpar exchange, a lower interest rate, extended maturity or slower payments, S&P said.
The $2.219 billion includes $1.13 billion that's guaranteed by Assured Guaranty, which carries an AA rating.
The company's capital stack also includes $1.2 billion of unrated AAF Operations Holdings LLC bonds and $985 million of so-called commuter bonds.
The Fortress-backed company
The train's struggles over the last year sparked deep drops in bond prices that
In 2024, the company overhauled its complex capital stack in a
The deal lifted much of the company's speculative-rated bonds into the investment-grade category for the first time — a move that some investors said came too soon.
