KBRA Downgrades Ratings for Brightline Florida’s $2.2 Billion Revenue Bonds to CCC+ From BB

KBRA downgrades to CCC+ from BB its ratings for the Florida Development Finance Corporation’s (FDFC) aggregate $2.2 billion revenue bonds (Brightline Florida LLC issue, series 2024, tax-exempt), associated with the Brightline Florida passenger rail project. A portion of the private activity bonds (PAB) ($1.13 billion) benefit from a financial guaranty policy issued by Assured Guaranty Inc., rated AA+/Stable by KBRA. The Outlook is Negative.

The downgrade reflects ongoing underperformance in ridership and revenues relative to KBRA’s rating case, as short- and long-distance demand through year-end 2025 remained below expectations despite the deployment of additional train cars and expanded capacity. Short-distance fare levels have also lagged projections made by both KBRA and the issuer, resulting in weaker-than-anticipated ticket revenues during 2025. This operating underperformance has led to continued draws on the project’s liquidity reserves, further weakening its financial position and increasing the risk of default as early as January 2027 under the rating case.

FDFC issued the PABs as a conduit issuer and lent the proceeds to Brightline Trains Florida LLC (Brightline Florida) as the borrower. Brightline Florida developed the 235-mile intercity high-speed passenger rail service connecting Southeast and Central Florida in two phases. Phase I, comprising a 67-mile segment from Miami to West Palm Beach, was completed in late 2017, with passenger service offered between Fort Lauderdale and West Palm Beach in January 2018, extending to Miami shortly after in May 2018. Phase II extended the system 168 miles from West Palm Beach to Orlando, commencing service in September 2023. The high-speed rail service spans Miami to Orlando, with main stations in Fort Lauderdale and West Palm Beach, as well as in-line stations in Aventura and Boca Raton, both of which started revenue service in December 2022.

Key Credit Considerations

(-) 2025 Performance Below KBRA Forecast

Ridership and revenue in 2025 continued to improve but did not reach KBRA’s expectations, with annual increases of 12.8% and 14.1%, respectively, compared to forecast growth of 26.3% and 37.5% under our rating case. Performance was constrained for most of the year by limited capacity while the company awaited additional train cars, which were delivered in December 2025. Notably, November and December—following the completion of fleet expansion—showed ridership and ticket revenues exceeding monthly forecasts, signaling potential for improved performance in 2026. However, ancillary revenues remained considerably below KBRA’s expectations in 2025, which partially offset the increase in ticket revenues.

(+) Completion of Capacity Expansion Expected to Improve Revenues

The company completed the transition to seven-car trainsets with the delivery of the last five premium class cars in December 2025, restoring full seat availability in short-distance trips, which had been reduced since the long-haul service started operations in September 2023. While initial post-expansion results are encouraging, with ridership and ticket revenue outperforming expectations in November and December, the key question is the scale of growth in 2026. This will be pivotal in determining the project’s ability to service its debt obligations without resorting to liquidity reserves in the short term, as well as its ridership ramp-up trajectory at full capacity in the medium term.

(-) Ongoing Cost Pressures

KBRA anticipates operating expenses for 2025 to be approximately 5% higher than forecast, and maintenance capex largely in line with the rating case. The company expects operating expenses through 2028 to increase at an annual average rate above our initial expectations, which could continue to exert pressure on Brightline’s financial performance should revenue growth lag current sponsor expectations.

(-) Liquidity Erosion and Increased Risk of Default

The January 2026 debt service payment on the PABs required a draw from the debt service reserve account (DSRA). Under KBRA’s current rating case forecast, cash flow from operations in 2026 will be insufficient to meet debt service, resulting in a full depletion of the DSRA and a potential default by January 2027.

Surveillance Rating Rationale

The downgrade to CCC+ from BB reflects continued operational underperformance in 2025 and erosion of liquidity, which together heighten near-term default risk. Full capacity was not achieved until late in the year, and while November and December showed positive momentum, full-year ridership and revenue performance fell well below KBRA’s rating case expectations. As a result, the project required a draw from the DSRA to meet the January 2026 interest payment, earlier than projected under KBRA’s prior analysis.

Despite these challenges, the completion of the trainset expansion in late 2025 eliminated capacity constraints, allowing the system to operate at full seat availability for the first time since the launch of long-haul service. Initial post-expansion results are encouraging; however, the magnitude and consistency of ridership growth through 2026 remain uncertain. KBRA will continue to monitor these trends closely, as they are critical to determining whether the project can stabilize its financial position or face further liquidity deterioration.

Operating expenses in 2025 exceeded our forecast, and projected annual increases through 2028 could further pressure the project’s cash flow if revenue growth does not materialize as expected. Under the current forecast, liquidity would be exhausted by January 2027 absent stronger-than-expected operating performance, which could potentially lead to a default on the PABs.

Outlook

The Negative Outlook reflects continued uncertainty regarding the project’s ability to stabilize its financial position following a year of underperformance and accelerated reserve usage. While Brightline has completed its capacity expansion and early signs of improved ridership are encouraging, it remains unclear whether 2026 operating results will be sufficient to materially reduce reliance on reserves and avoid a default in 2027.

KBRA views the current forecast as a conservative floor; however, the trajectory and magnitude of ridership growth at full capacity remain untested. Until there is clearer evidence of sustained financial improvement and reserve stabilization, the potential for further deterioration in credit metrics remains elevated.

Rating Sensitivities

Higher-than-expected ridership and stabilized operating costs, resulting in sustainably higher cash flow available for debt service after the ramp-up phase, could lead to an upgrade.

The rating could be downgraded if ridership and/or revenues are lower than expected during 1H 2026, the ramp-up period is more prolonged than anticipated, or operating costs exceed KBRA’s rating-case assumptions.

ESG Considerations

Environmental Factors

Brightline Florida’s passenger rail service is estimated to represent a 75% reduction of CO₂ emissions per passenger kilometer compared to car transportation. Therefore, the transaction could potentially benefit from future regulations to address carbon limits and promote public transportation. The company received the green bond designation in 2019.

Social Factors

A shift in traveler preferences toward cleaner and more efficient modes of transportation could benefit Brightline Florida’s ridership, particularly if these changes prove durable. However, given the high exposure of the passenger rail industry to economic cycles, ridership could be impacted by economic downturns that result in rising unemployment and a reduction in disposable income.

Governance Factors

Brightline Florida’s management team comprises professionals with a wealth of experience in the transportation and hospitality industries. Further, the company’s construction management and operating teams come from diverse backgrounds with experience in some of the largest rail systems in the country, in addition to benefiting from Siemens engineers on site 24/7.

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