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Real Madrid defender Pepe has reportedly signed a contract extension until 2016.

Portuguese defender Pepe has agreed terms with La Liga powerhouse Real Madrid over a contract extension until the summer of 2015, Spanish publication Marca reports.

The highly rated centre-back has been in contract talks with Los Blancos for several weeks now and the two sides have finally managed to reach an agreement.

Pepe's previous deal was due to expire in the summer of 2012, but the former Porto star will stay put for three additional years. The centre-back will earn €4 million per year under the terms of his new deal.

Real Madrid have yet to confirm Pepe's contract renewal on their official website, but general director Jorge Valdano admitted on Sunday that a new deal wasn't far away.

"The negotiations with Pepe are going well," the director was reported as saying to Sky Sports. "He is an excellent person and one of the best central defenders in the world."

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