A project to build a high-speed railway linking the Muslim religious sites of Mecca and Medina has secured SAR3.4bn-worth (US$800mn) of financing from a Spanish-led syndicate of banks.
The financing was secured as Spanish borrowing costs hit new heights and the country’s credit profile continues to deteriorate.
Spanish banks BBVA, Banesto, CaixaBank and Banco de Sabadell along with Crédit Agricole and Deutsche Bank have provided the financing in the form of advance and performance bonds.
The Spanish export credit agency (ECA) Cesce and the Official Credit Institute of Spain have provided partial guarantees for the bond. Saudi re-issuing banks are Saudi British Bank and the Riyadh branch of Deutsche Bank.
Sandra Nolasco, global head of structured trade finance at BBVA talks to GTR about the difficulties in getting the deal signed: “Current market circumstances are very tough and, naturally, the situation in Spain has an impact in BBVA. However, BBVA has a very solid position and continues to maintain a clear focus on its core businesses.”
The total cost of the project is €6.74bn (US$8.22bn), which will cover the design and construction of the railway systems, as well as the supply of 36 high-speed trains and 12 years of operation and maintenance support. There is a further option to buy 23 more trains.
A consortium of Spanish companies comprising of Adif, Cobra, Consultrans, Copasa, Dimetronic, Imathia, Inabensa, Indra, Ineco, OHL, the state-owned Renfe and Talgo won the bid along with Saudi firms Al Rosan and Al Shoula. Contracts were signed in January this year with Saudi Railways Organisation.
The Mecca-Medina railway, also known as the Haramain high-speed rail project, is one of the largest foreign infrastructure projects won by Spanish companies.
It will involve the construction of 450km of high-speed railway through the Saudi desert capable of handling speeds of up to 360km per hour.
The success of the Spanish consortium was seen to further consolidate the country’s expertise in the development and export of its high-speed rail technology.
BBVA’s Nolasco remarks: “Spanish companies are increasingly active in the international area and over the past years have been particularly successful in exporting not only its products, but also it know-how.
“Cesce has shown an outstanding capacity to adapt to current market circumstances and has been fully fulfilling its role by strongly supporting Spanish exporters.”