MercadoLibre Raises US$1 Billion in Ten-Year Notes
ARGENTINA · MERCADOLIBRE
Key Facts
- —Who is MercadoLibre Latin America’s largest e-commerce and payments company, founded in Argentina and now incorporated in Delaware.
- —What it did Sold US$1 billion of ten-year bonds. They priced on 11 September and settled on 14 September.
- —The terms 5.850% coupon, due 2036, yield 6.139%, priced 130 basis points over US Treasuries.
- —Who owes the money MercadoLibre, Inc., the Delaware parent, not an Argentine subsidiary.
- —The other announcement A company study called Efecto MELI, presented on 14 September, claiming its Argentine operations add US$5.4 billion of value, about 1% of GDP.
- —Whose numbers The company’s own. The study was commissioned and presented by MercadoLibre.
MercadoLibre borrowed a billion dollars at 6.1% in a week when US ten-year yields touched 5%.
MercadoLibre priced US$1 billion of 5.850% notes due 2036 on 11 September, settling on 14 September. The yield was 6.139%, a spread of 130 basis points over US Treasuries.
The Bond
The issue is US$1 billion of senior notes with a 5.850% coupon, maturing in 2036.
Pricing was on 11 September and settlement on 14 September, a standard three-day cycle.
The yield to investors is 6.139%, which is 130 basis points above the comparable Treasury.
The issuer is MercadoLibre, Inc., the Delaware-incorporated parent company.
Why 130 Basis Points Is the Number
A spread of 130 basis points over Treasuries is what an investment-grade American corporate borrower pays.
It is not what a Latin American issuer usually pays. Argentine sovereign debt trades at 485 basis points over.
MercadoLibre borrows as a United States company with revenue across the region. That, not its Argentine origin, sets the spread.
The timing was difficult. US ten-year yields touched 5.011% the following day, the highest since July 2007.
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What the Money Is For
Ten-year money at a fixed coupon funds long-lived assets: warehouses, logistics networks and the lending book of Mercado Pago.
MercadoLibre has been building fulfilment capacity across Brazil, Mexico and Argentina at a pace that consumes cash faster than operations generate it.
Its credit business also requires funding, and funding it with ten-year debt rather than short-term borrowing reduces refinancing risk.
The company has not specified an allocation beyond general corporate purposes.
The Argentina Study
On 14 September MercadoLibre presented a study it calls Efecto MELI, on its economic footprint in Argentina.
The headline claim is US$5.4 billion of added value, which the study puts at roughly 1% of Argentine GDP.
It also claims 126,500 jobs: 16,700 direct and 109,800 indirect.
These are the company’s own figures from its own commissioned study. They have not been independently verified, and indirect-employment multipliers are a contested methodology everywhere they are used.
Why the Company Publishes Numbers Like These
MercadoLibre was founded in Buenos Aires in 1999 and remains the largest private-sector technology employer in Argentina.
It is also a Delaware company listed on Nasdaq. Its relationship with the Argentine state is therefore negotiated, not owed.
Argentina is in the middle of a deregulation programme, and companies with a case to make are making it.
A study quantifying national contribution is an argument addressed to a government, published in the week its budget went to Congress.
Where the Business Actually Is
Brazil is MercadoLibre’s largest market by revenue, followed by Mexico. Argentina is third.
The company reports in US dollars and has managed Argentine peso devaluation through pricing and local reinvestment.
Mercado Pago, its payments arm, has grown faster than the marketplace in recent years and now carries a substantial credit portfolio.
A comparison circulating this week between founder Marcos Galperín and Carlos Slim does not appear in the coverage of either announcement.
What to Watch
Where the notes trade after settlement, which shows whether the 130 basis point spread was correctly priced.
Third-quarter results, which will show whether the credit book is growing faster than provisions.
Argentine regulatory decisions on payments and credit, the area where the Efecto MELI argument is aimed.
And US Treasury yields, which set the cost of the company’s next issue.
More: Argentina news, every day from The Rio Times.
Frequently Asked Questions
What did MercadoLibre issue?
US$1 billion of 5.850% senior notes due 2036, priced on 11 September and settled on 14 September.
What was the yield?
6.139%, a spread of 130 basis points over comparable US Treasuries.
Who is the issuer?
MercadoLibre, Inc., the Delaware-incorporated parent, not an Argentine subsidiary.
What is Efecto MELI?
A study the company presented on 14 September claiming its Argentine operations add US$5.4 billion of value, about 1% of GDP.
Are those figures independent?
No. They come from MercadoLibre’s own commissioned study and have not been independently verified.
How many jobs does the study claim?
126,500 in total: 16,700 direct and 109,800 indirect.
Sources: MercadoLibre investor relations, US Securities and Exchange Commission filings, Efecto MELI study, Bloomberg Línea, Infobae.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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