KBRA Downgrades the Ratings for Brightline East LLC’s Senior Secured Notes to B- From B+
5 Aug 2025 | New York
KBRA downgrades to B- from B+ its ratings for Brightline East LLC’s $1.33 billion senior secured notes. The Outlook is Negative.
Brightline East is the indirect owner of Brightline Trains Florida LLC (Brightline Florida), the owner and operator of a 235-mile intercity high-speed passenger rail connecting Southeast and Central Florida. The rating downgrade and Negative Outlook respond to Brightline’s underperformance during 2024 compared to KBRA’s rating case coupled with our expectation of further liquidity constraints during the ramp-up phase. In December 2024 Brightline East repurchased $206.2 million of senior notes, reducing the outstanding balance to $1.1 billion.
Key Credit Considerations
(-) Slower Recovery Outlook and Revised Forecast Assumptions
While Brightline has made progress in expanding capacity and restoring service, overall ridership recovery is now expected to occur at a slower pace than previously anticipated. KBRA has revised its forecast to reflect the project’s recent performance trends and continued uncertainty surrounding the timing and strength of demand recovery—particularly in the short-distance segment. Under the updated rating case, total ridership is projected to grow at a compound annual growth rate (CAGR) of 3.8% from 2023 through 2054, while ticket revenues are expected to grow at a 5.4% CAGR over the 2024–2054 period. KBRA has also adjusted its fare escalation assumption to 2.0% annually (down from 2.5%), informed by historical pricing trends and limited visibility into long-term elasticity once the service returns to full schedule.
(-) Limited Liquidity
As of June 30, 2025, Brightline East had $230.8 million in liquidity reserves, including the $30.8 million debt service reserve account (DSRA). Under KBRA’s updated assumptions, and given that no distributions from the OpCo are expected before 2027, the liquidity currently available will be sufficient to cover debt service through July 1, 2026, exposing the transaction to a potential default as early as January 1, 2027, should ridership and revenues not exceed KBRA’s forecast, or if higher operating expenses continue through the ramp-up phase.
Surveillance Rating Rationale
The rating reflects ongoing underperformance at the OpCo level, where overall ridership and revenue recovery have lagged expectations despite progress in fleet expansion. Although Brightline achieved six-car trainsets by June 2025 and remains on track to reach full seven-car configurations by year-end, the anticipated recovery in demand has been slower than projected, increasing uncertainty around the timing and strength of cash flow generation.
As a result, distributions from the operating company to Brightline East are not expected to resume before 2027 under KBRA’s updated rating case. The liquidity position at Brightline East remains unchanged as of June 30, 2025, and is projected to be sufficient to meet debt service obligations only through July 1, 2026. Absent external support or a material improvement in project performance, Brightline East could face insolvency by January 1, 2027.
Although refinancing risk is somewhat mitigated by the project’s long asset life—resulting in a discounted cash flow (DCF)-to-debt ratio of 3.09x as of January 2027—persistent underperformance during the ramp-up period could significantly impair cash flow visibility and weaken Brightline East’s ability to withstand downside scenarios.
Outlook
The Negative Outlook reflects KBRA’s updated ridership forecast, under which distributions to Brightline East are not expected until 2027, at which point the transaction could be facing high solvency risk. A ratings upgrade is unlikely due to the slower-than-expected ramp-up as well as the notes’ structural subordination to any existing and future debt issued by Brightline Florida. A ratings downgrade over the next 18 months is possible if performance during 2025 fails to exceed KBRA’s current expectations.
Rating Sensitivities
A ratings upgrade is unlikely given the structural subordination of the notes to all debt issued at the Brightline Florida level.
We could lower the ratings if there were lower-than-expected ridership and/or revenues, a slower or more prolonged ramp-up period, or higher operating costs than forecast in KBRA’s rating case that expose Brightline to high liquidity and solvency risk.
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 regulation to address carbon limits and promote public transportation.
Social Factors
Traveler preference toward cleaner and more efficient modes of transit could benefit Brightline Florida’s ridership, especially if such preference changes are permanent. 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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