Deutsche Bank has successfully provided project financing to support Phase 1 of Portugal’s first high-speed railway line, which will ultimately link Porto and Lisbon upon completion. The first tranche of Phase 1 financing has been earmarked for the construction and maintenance of a 71km route connecting Porto-Campanhã and Oiã. Work is scheduled to begin by the end of 2025.

Phase 1 of the Porto-Lisbon line will cover 143km in total and connect Porto-Campanhã to Soure (Coimbra district). The Porto-Lisbon route is seen as a key part of the European Union’s (EU’s) ambition to connect the continent’s major cities via a high-speed rail network.¹

Financing for the Porto-Campanhã–Oiã section, worth €2.7 billion in total, was provided to a consortium of Portuguese construction companies and a financial investor, led by Portuguese engineering company Mota-Engil, by several national and international financial institutions, including Deutsche Bank.²

The European Investment Bank, the EU’s lending arm, has put €875 million towards the Porto-Campanhã–Oiã section,³ while grants totalling €480 million were provided by the Connecting Europe Facility – an EU funding programme. A further €150 million in co-financing has come from Infraestruturas de Portugal, the public body responsible for overseeing the Porto-Campanhã–Oiã route.⁴

A 25-year relationship with Mota-Engil enabled Deutsche Bank to monetise its participation in the senior project finance debt, with the bank mandated in every part of the transaction.

Deutsche Bank acted as mandated lead arranger, original lender (senior and junior) as well as hedge coordinator and deal-contingent interest rate swap provider. Through its Trust and Securities Services division, the bank is also acting as paying agent, account bank, facility agent, and security trustee, while securing the cash management mandate and issuing the trade finance performance bond under Mota-Engil corporate credit risk, as engineering, procurement, and construction contractor.

This transaction exemplifies Deutsche Bank’s commitment to its Global Hausbank strategy, with seamless collaboration between Corporate Bank and Investment Bank teams. The ability to cross-sell across multiple product lines and coordinate with internal and external stakeholders was key to delivering a comprehensive one-bank solution.

Lothar Meenen and Catarina Ribeiro in the Corporate Coverage Europe/Portugal team echoed the value of a long-term relationship with Mota-Engil, in line with Deutsche Bank’s purpose statement: “We are proud to be part of a landmark infrastructure transaction in Portugal. Leveraging our long-standing relationship with Mota-Engil, this deal builds credentials for future phases of the high-speed rail project and positions Deutsche Bank for similar public-private partnership opportunities in Europe.”

Michael Volkermann, Global Head of Project Finance at Deutsche Bank, commented: “We are delighted to support the EU’s efforts to accelerate investment in key infrastructure sectors. This marks Deutsche Bank’s first project finance transaction in Portugal in the transport sector, paving the way for future growth in the Iberian market.”

Nuno Teixeira da Silva, Chief Financial Officer of Mota-Engil Capital, noted the “proactive approach” that Deutsche Bank adopted from the very beginning of what was a complex project, observing that the bank played a “key role presenting a wide range of [financing] solutions”.

Deutsche Bank’s deal team and the project sponsors at the signing of the concession agreement

The project ties in with the EU’s ambition to create a high-speed rail network connecting the bloc’s major cities along the ‘Atlantic Corridor’, an initiative that forms part of the EU’s Trans-European Transport Network plan.⁵

Once the high-speed Porto-Lisbon route is completed in 2032, it is expected to serve around 10 million passengers per year, cutting travel time between Portugal’s two largest cities from approximately three hours to 1 hour 15 minutes.⁶

In addition to improved transport connections and reduced travel times, the project also fulfils the EU’s climate objectives by promoting a more efficient and sustainable alternative to road and air transport.

Miguel Cruz, President of Infraestruturas de Portugal, noted that the project is a tangible “commitment to the future” that “will bring people and regions closer together, boost clean mobility, and position Portugal as a more cohesive and competitive country”.⁷

Sources

¹ See ec.europa.eu
² See mota-engil.com
³ See ec.europa.eu
⁴ See infraestruturasdeportugal.pt
⁵ See transport.ec.europa.eu
⁶ See ec.europa.eu
⁷ See ec.europa.eu