Speculative grade bonds

The governor, in the final year of his term, asked lawmakers to approve reforms that would fix the Virgin Islands Water and Power Authority's balance sheet.

Subordinate bondholders will likely be wiped out.

Fitch's three-notch senior bond downgrade reflects "substantial credit risk."

The Florida train is struggling to generate enough revenue to pay its debt.

Eurostar veteran Nicolas Petrovic will oversee the Florida system while Mike Reininger will focus exclusively on Brightline West.

Fitch Ratings downgraded Nebraska's Regional West Health Services by two notches, lowering its long-term issuer default rating to CCC from B-minus.

The dramatic downgrade projects a default by January 2027 on bonds issued to finance the Miami-to-Orlando passenger train service.

Two student housing developments in Orlando and Tampa, Florida, financed by speculative-grade bonds in 2024, have shown signs of strain.

The company has the option to defer interest payments three times without triggering a formal default.

Concerns about Brightline have dragged down performance in the high yield sector this year.

Fortress Investment Group bought the property in 2021 after it was largely destroyed by Hurricanes Irma and Maria and financed a major renovation that featured reinforcement standards designed to protect against a category 5 hurricane.

The new debt is a "bridge loan" until the company can raise fresh financing, a bondholder said.

Bonds have traded up since the company last week announced a tentative bondholder deal and project update and financing details.

The deal would give the company time to seek additional equity, debt and federal funds.

Flows into high-yield muni mutual funds had slowed over the past several weeks, and the past two weeks have seen outflows.

Assured Guaranty commented on Brightline and PREPA during its third-quarter earnings call, on which the company reported a 46% increase in third quarter gross par written year over year, to $7.85 billion from $5.38 billion.

Moody's cited very narrow liquidity, very high leverage and concerns about delays in opening up a new campus.

Meanwhile, the Brightline West train project has floated a possible debt exchange ahead of its own mandatory redemption later this month.

The utility responded that it is not eligible to declare bankruptcy.

The financing challenges facing both Brightline projects have translated into falling bond prices.