- Brightline, the private rail line linking Orlando to Miami, refinanced $985M of junior debt at a record-high 14.89% yield, reflecting deep investor concern after delaying a July interest payment on $1.2B in munis. The company, already downgraded deeper into junk by S&P and Fitch, faces falling ridership (53% below projections) and revenue (67% below estimates), plus a potential cash shortfall this quarter without an equity infusion. This is a reminder that non-traditional, revenue-dependent projects carry extreme credit and liquidity risks in the muni space, especially in the absence of essential-service backing or state/local guarantees. While double-digit yields may seem attractive, these securities are highly speculative and vulnerable to payment delays. They should be approached with caution unless part of a well-diversified high-yield allocation.
- S&P boosted the rating on $17.1B of MTA debt backed by farebox and toll revenue from A- to A, citing ridership recovery, liquidity, manageable deficits, new state payroll tax revenue, and early success of New York City’s congestion pricing program. The $9 peak-hour toll for vehicles entering below 60th Street is projected to net $500M annually after expenses, aiding the agency’s $68.4B capital plan. This upgrade underscores the benefit of dedicated revenue streams and strong state support in essential-service transit credits. While the MTA still carries a heavy debt load and faces future operating gaps, higher ratings can support secondary market liquidity and potentially lower borrowing costs, making these bonds more stable than many other large-issuer transit credits.
- July core CPI rose 0.3% MoM, in line with forecasts, while headline CPI increased 0.2%. The data eased fears of an upside surprise, prompting a rally in short-term Treasuries and lifting market odds of a September 17 Fed rate cut to nearly 90%. A softening labor market remains the Fed’s focal point, with some strategists calling for a potential 50 bps cut. We continue to see this discussion getting stronger, expecting a 50bps cut in September, instead of the 25 bps previously expected. Additionally, we are now discussing a second cut for the last quarter.
- Taxable municipal bonds have returned 4.7% YTD, the best performance since 2020, driven by low supply. This outpaces the 0.1% gain in tax-exempt debt and the 1.4% decline in high-yield munis.
- The 5-year/30-year Treasury spread has widened to just over 100 bps, the most in four years, following President Trump’s nomination of Stephen Miran to the Fed Board. JPMorgan strategists say Miran’s dovish policy lean, including views that Trump’s trade and deregulation policies are disinflationary, could support further steepening. Markets now price a 95% chance of a September Fed cut and at least one more by year-end. While some strategists see deficit and issuance dynamics as bigger drivers, the appointment adds policy uncertainty to an already volatile long-end.
Securities offered through NewEdge Securities, LLC, member FINRA and SIPC. The DRL Group is not a subsidiary or control affiliate of NewEdge Securities, LLC. NewEdge Securities, LLC. has no affiliation to BondDesk Trading LLC or BondTrader Pro, or Tradeweb Direct, Bondpoint, TMC, Market Axess or any ECN.
Yield to call (YTC) is not indicative of total return; this yield is valid only if the security is called. Bonds may or may not be called, or be callable on multiple dates or, in other cases, called any date following the first call date, so yield to call is based on the earliest stated call date. Discounted bonds may be subject to capital gains tax. Bonds may be subject to OID (Original Issue Discount). Prices and availability may change at anytime without notice.
Do not buy bonds based on the Yield to Call (YTC). Insured bonds are issued for timely payment of principal and interest only. Insured bonds do not cover potential market loss and are subject to the claims paying ability of the insurance company.
Non-rated (NR), With-Drawn (WR), or below investment grade bonds, lower rated bonds, carry a greater potential risk of default & should be considered by sophisticated investors only.
This document is for informational purposes only and does not replace or serve as a substitute for your official monthly statement generated by NFS. Please refer to your official statement for accurate and comprehensive account details.
Bonds may be subject to capital gains tax. This summary is for informational purposes only and is not an offer or solicitation for the purchase or sale of any security or a recommendation or endorsement of any security or issuer. NewEdge Securities, LLC. and DRL Group make no representation about the accuracy, completeness, or timeliness of this information. Bonds could also be subject to the DeMinimis Rule, please consult with your tax advisor for further clarification.
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