MercadoLibre Shares Drop on New Debt Issuance
MELI shares declined 3.13% as the company launched a new dollar bond offering.
MercadoLibre Inc. shares fell 3.13% during trading on Tuesday. The decline followed the announcement of a new issuance in global debt markets. This marks the third time the company has accessed these specific markets. The firm is offering dollar-denominated notes with a maturity date of 2036. The initial spread is set at approximately 160 basis points over comparable US Treasuries. Proceeds from the sale will fund general corporate purposes. These details were reported by a person familiar with the matter.
Credit Ratings Remain at Lowest Tier
Fitch and S&P assign the new notes a BBB- rating. Moody's rates the issue at Baa3. These represent the lowest investment-grade levels at all three agencies. Moody's cites operating performance and market leadership as positive factors. The agency also notes solid liquidity support. However, it flags lower profitability due to accelerated investment in logistics. Spending on customer acquisition and credit business expansion also pressures margins. Funding risks tied to rapid fintech growth are a further concern.
Record Revenue Supports New Borrowing
Second-quarter revenue increased 50% year over year to 10.2 billion dollars. This marks the 30th consecutive quarter of sales growth above 30%. The company has not issued new debt since December. This transaction is handled by a large syndicate of banks. Allen & Company, BofA Securities, and Citigroup are among the arrangers. Goldman Sachs, JPMorgan, Morgan Stanley, and Santander also participate in the deal.
Market Reaction to Issuance Terms
Existing 2033 notes were quoted around 5.7% on Tuesday. The new 2036 notes are priced relative to these benchmarks. Investors are assessing the cost of capital against growth targets. The return to debt markets signals a need for fresh funding. This comes despite strong top-line growth. The stock reaction suggests caution regarding the expanded balance sheet. Sources cited in GN auto markets/bonds: corporate bonds confirm the deal structure.
