Iberian banks close Portuguese road PPP

Ten Iberian banks and the European Investment Bank have provided a debt package of €1.2bn to close one of the last projects that forms part of Portugal’s €5bn roads programme. Despite its recent downgrade and pressure from the financial markets, pricing on the funding remained the same.

Portugal’s €1.4 billion Pinhal Interior public-private partnership (PPP) – the last project that forms part of the country’s €5 billion road PPP programme – reached financial close yesterday.

Pinhal Interior: crisis
didn't affect pricing

A club of 11, mostly Iberian banks, helped close the deal with a 22-year, €1.2 billion loan. Barclays, Banco Popular, Banesto, Banif, BBVA, BPI, Caixa BI, Caja Madrid and La Caixa provided €900 million of the debt package with the European Investment Bank contributing the remaining €300 million. The winning consortium will finance the remaining €200 million from its balance sheet.

Pricing on the loan starts at 275 basis points and rises to 350 basis points over the length of the loan. Portugal had its rating recently downgraded by Standard & Poor’s to A- and has seen the price of government treasuries rise steeply as markets fear that, like Greece, it may be at risk of defaulting. But a source involved in the deal said that none of the banks asked to renegotiate the loan terms as a result of this.

The Pinhal Interior PPP will require the concessionaire to manage some 567 kilometres of roads, of which only 20 percent are highways. Of the total amount, 173 kilometres will be greenfield roads. The concessionaire will receive availability payments from the government but will also collect tolls directly on some stretches of the project. Availability payments are public contributions paid to the concessionaire in exchange for making the asset available in good condition.

Ascendi – the joint venture between Portuguese bank BES and construction company Mota-Engil – is the concessionaire for the project. Pinhal Interior was one of the last roads of Portugal’s original roads programme still in procurement – the other being the AE Centro highway.