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Distressed hedge funds buy about $190m of Brightline municipal debt
The bonds were acquired from Nuveen after Brightline filed for Chapter 11 and changed hands at about 45 cents on the dollar before trading near 55 cents on Wednesday.
Distressed-debt hedge funds Diameter Capital Partners, Redwood Capital, and FourSixThree Capital have acquired about $190m of municipal bonds issued by bankrupt Florida rail operator Brightline, according to Hedgeweek, citing a Bloomberg report.
Hedge funds bought the debt from Nuveen this week after the asset manager offered its entire position in Brightline senior unsecured municipal debt for sale just days after the railroad filed for Chapter 11 bankruptcy.
The transaction was conducted through a bids-wanted-in-competition process and structured as all-or-nothing. The bonds changed hands at about 45 cents on the dollar, and subsequently recovered to around 55 cents on Wednesday, according to market data cited in the report.
Hedgeweek said representatives for Diameter and FourSixThree declined to comment, while Nuveen declined to discuss the trading activity, and Redwood did not respond to requests for comment.