A second firm has downgraded Brightline's credit rating as the passenger train service struggles to grow fast enough to keep up with its debt payments.
Fitch Ratings became the second credit ratings firm in two months to cut its view of billions of dollars of Brightline's IOUs. The actions by Fitch and S&P Global put some of Brightline's bonds further into junk bond territory and provide further signals of growing skepticism that the train service will be able to make its debt payments on time and in full in the months ahead.
In Fitch's analysis, Brightline has "substantial credit risk and very low margin of safety" as the company taps into its financial reserves to pay interest on some of its bonds.
Brightline used some of its reserves on New Year's Day to pay the interest due on some of its borrowings.
Last week, Brightline skipped an interest payment on a different series of bonds. It was the second postponed payment. Bond agreements allow Brightline to delay three interest payments before violating its borrowing obligations.
Brightline also has negotiated a change in terms of how it can repay about $1 billion of borrowing. Instead of paying lenders back in cash, the service is able to swap its debt for ownership stakes in the train line.
This debt-for-equity swap can be a common strategy for firms with significant debt and an operating business with significant assets.
For months, Brightline has said it is "actively pursuing" selling a substantial portion of the company, however, no deal has been announced.
READ MORE: Brightline's business races against time and money as an analyst warns of default
A record number of passengers rode a Brightline train last month — almost 300,000. But the service is finding it difficult to raise fares and keep growing ridership. Brightline retooled its train schedule, fare strategy and added more cars during the autumn as efforts to help increase its revenue faster.
"The addition of new train cars to address capacity constraints has not alleviated concerns that demand will rise sufficiently and quickly enough to drive higher ridership and fare revenue to cover near-term debt service," Fitch wrote in its analysis.
The credit rating agency believes Brightline will be able to cover an interest payment due in July only by exhausting the money set-aside to make those payments, unless business and train fares pick up more than expected before then.
Brightline saw record ridership in December, but is having difficulty raising fares.
Financial results for 2025 are not expected to be released to bondholders for several months. Brightline spent $211 million operating its basic business during the first nine months of last year. Revenue totalled $156 million during the same time period, leading to an operating deficit of $56 million. Adding its administrative costs, Brightline's operating loss was almost $100 million during the first three quarters of last year.
The company faces $162 million in debt payments this year.
The ratings downgrades by two major credit ratings agencies reflects growing risk of a debt default by Brightline, possibly by early next year. The company could still operate if it defaults on its bonds, working with its lenders to restructure its IOUs.
Copyright 2026 WLRN
