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 a report by Bloomberg citing unnamed people familiar with the transaction.

The three hedge funds bought the bonds from Nuveen this week after the asset manager offered its entire position in Brightline's 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 was structured on an all-or-nothing basis. The bonds changed hands at about 45 cents on the dollar, according to people familiar with the deal.

The hedge funds regarded the price as low, with some of the securities having previously traded around 20 cents higher. The bonds subsequently recovered, trading at about 55 cents on Wednesday, according to market data.

Representatives for Diameter and FourSixThree reportedly declined to comment, while Nuveen reportedly declined to discuss the trading activity. Redwood reportedly did not respond to requests for comment.

The sale came unusually quickly for the municipal-bond market, given both its size and its timing so soon after Brightline's bankruptcy filing.

Meanwhile, creditors holding roughly $1bn of Brightline debt that had initially remained outside the restructuring have agreed to the company's restructuring support agreement. Brightline's legal advisers said the agreement now has support from creditors representing approximately $4.6bn of the company's $5.5bn in total debt.

The restructuring plan also provides Brightline with $258m of bankruptcy financing from Assured and other municipal investors. A further $490m of debt financing has been committed for the company following its emergence from Chapter 11.