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Path to Payment, Ramifications of Nonpayment Uncertain as Jan. 15 AAFOH Coupon Date Looms for Brightline Florida
Brightline Florida entity AAF Operations Holdings LLC, or AAFOH, faces a Thursday, Jan. 15, interest payment date on its $1.211 billion of Series 2024 and Series 2024A bonds. The looming payment date has particular relevance in light of Brightline’s financing structure, in which AAFOH debt service is currently dependent on funds upstreamed from its indirect subsidiary, Brightline Trains Florida LLC, or OpCo., the Fortress-backed high-speed rail operator’s only operating entity.
Brightline’s performance has lagged projections, and OpCo recently used a draw from the debt service reserve account for its $2.219 billion of Series 2024 bonds to fund a Jan. 1 interest payment. Direct AAFOH subsidiary Brightline East LLC, the obligor of $1.119 billion of senior secured notes, also sits in front of AAFOH in the flow of funds from OpCo, presenting an additional payment hurdle.
Recent developments show that the senior secured notes face their own payment issues. Early last month, Bloomberg reported that hedge fund holders of $1.1 billion of Brightline Florida corporate debt were planning to restructure the obligations and elevate their claims above other creditors by offering “new financing and concessions.” Although market chatter on that front has since “died down [and] doesn’t seem like a big focus right now,” according to a source close to the deal, S&P Global Ratings downgraded the Brightline East notes to CCC from CCC+ on Dec. 19.
According to the official statements for the AAFOH Series 2024 and Series 2024A bonds, a ramp-up reserve for the issues was funded to cover interest payable through at least Jan. 15, 2025. However, the company’s deferral of its last interest payment on the issues, due July 15, 2025, suggests that the reserve may have been exhausted or is otherwise unavailable.
Although a failure to pay debt service on the AAFOH Series 2024 and Series 2024A bonds while they are in term rate mode is not an event of default under the bond documents “unless and until a Failure to Pay Interest occurs on three consecutive Interest Payment Dates,” a cash payment requirement introduced in connection with the August 2025 remarketing of $985 million of Series 2025A bonds for direct AAFOH parent Brightline Florida Holdings LLC, or TopCo, raises the prospect of a catalyst event before a third interest payment is missed.
The official statement for the $985 million of TopCo Series 2025B bonds issued to refinance the Series 2025A bonds ahead of an Aug. 15, 2025, mandatory tender date says that TopCo was required to “cause AAFOH to make a cash interest payment on the AAFOH Bonds on or prior to the next Interest Payment Date … following the Remarketing Date in an amount not less than six months of interest.” But as the Jan. 15 coupon date approaches, the company’s EMMA disclosures and public statements do not indicate whether the AAFOH payment has or will be made. In addition, the Wall Street Journal reported late last week that Brightline taxable creditors were “huddl[ing] with advisers” ahead of the Jan. 15 payment date.
AAFOH’s Series 2024 bond maturing July 15, 2032, last traded between 32.5 and 33 on $1 million of volume on Dec. 3, 2025, according to secondary trading data on EMMA.
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