Nuveen said to dump $190 Million of Brightline debt at 45 cents

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Nuveen LLC was behind a flurry of trading in Brightline’s municipal debt this week, offering up its entire position in the bankrupt private railroad’s senior uninsured bonds, according to people familiar with the matter.

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The asset manager put up for sale roughly $190 million of Brightline bonds through a process known as bids-wanted-in-competition, or BWIC, said the people, who asked not to be named because the information is private. The portfolio sale, spanning several individual securities, went through on Monday at 45 cents on the dollar, a steep decline from where the debt last changed hands, according to data compiled by Bloomberg.

The move, coming just days after Nuveen backed the bankruptcy of the Florida railroad, is poised to reverberate across the firms that remain invested in the bonds, including Invesco Ltd. and First Eagle Investment Management. The large trade also may dent Nuveen’s flagship high-yield muni fund, which dropped by about 2% on Monday.

A spokesperson for Nuveen declined to comment on the trading activity.

“Since April 2023, Nuveen has reduced exposure to Brightline by more than 75%, and our flagship fund remains underweight relative to the benchmark,” the spokesperson said. “Throughout the restructuring process, we successfully protected our remaining allocations, specifically the third lien and commuter holdings.”

Brightline filed for bankruptcy last week after struggling for years under a debt load that swelled to $5.5 billion and was based on lofty estimates for ridership and revenue that failed to materialize. Its restructuring plan calls for relatively limited pain on the bonds that Nuveen sold — investors agreed to defer three interest payments due between now and January 2028 until January 2031.

Nuveen’s BWIC was offered on an all-or-nothing basis, the people familiar said, which typically indicates that buyers have to take the entirety of the portfolio. Still, due to muni disclosure rules, which initially tag any trade greater than $5 million as such, the exact amount of debt Nuveen sold won’t become publicly available until next week.

More immediately, the sharply lower prices may force markdowns among other investors, like the $6.6 billion First Eagle High Yield Municipal Fund, just as the broader muni market is contending with a rout that has left it facing its worst month of returns since 1987.

First Eagle’s fund, managed by Nuveen’s former star muni manager John Miller, counts Brightline’s bonds due in 2053 as its fifth-biggest holding by market value, data compiled by Bloomberg show. That debt traded on Sept. 17 at about 64 cents on the dollar, compared with 45 cents on Monday.

First Eagle’s muni fund fell by 2.7% on Monday, its biggest decline since the tariff tantrum of April 2025. First Eagle is the biggest holder of Brightline’s senior uninsured municipal bonds with about $226 million, according to data compiled by Bloomberg.

A First Eagle spokesperson didn’t respond to a request for comment. Miller voiced support for the bankruptcy plan in a statement last week, citing Brightline’s “continued operational progress.”

Creditors in a bankrupt company are generally allowed to buy and sell its debt once a restructuring plan is in place, as long as they no longer possess material non-public information. Otherwise, they are typically restricted to trading with other members with similar levels of information.