Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>MercadoLibre priced US$1.0bn 5.850% 2036s at 6.139%; we remain Neutral, rate the new bond Hold, and continue to prefer the lower-duration 2031s.</li>
<li>The deal lifts pro forma liquidity coverage to ~1.10x, but total debt rises to US$14.18bn, gross leverage to ~3.64x, and annual coupon expense by US$58.5mn. </li>
<li>The 2036s offered no obvious new-issue concession and sit broadly in line with long-dated LatAm IG peers, leaving limited valuation cushion against funding-intensive Fintech growth. </li>
</ul>


MercadoLibre priced US$1.0bn 5.850% 2036s at 6.139%; we remain Neutral, rate the new bond Hold, and continue to prefer the lower-duration 2031s.
The deal lifts pro forma liquidity coverage to ~1.10x, but total debt rises to US$14.18bn, gross leverage to ~3.64x, and annual coupon expense by US$58.5mn. 
The 2036s offered no obvious new-issue concession and sit broadly in line with long-dated LatAm IG peers, leaving limited valuation cushion against funding-intensive Fintech growth. 


MercadoLibre Prices US$1.0bn 5.850% 2036 Senior Unsecured Notes

<ul>
<li>Revenue rose 49.8% YoY and the credit portfolio 75.2%, while adjusted EBITDA margin held at 9.6%; gross and net leverage increased to 3.39x and 1.65x.</li>
<li>Operating cash flow reached $3.66bn and FOCF $3.22bn, but lending and restricted funds absorbed most cash, leaving adjusted FCF at just $214mn.</li>
<li>Neutral maintained as spreads offer limited cushion for rising balance sheet intensity; we prefer the shorter-duration bond after the longer bond’s prior spread concession disappeared.</li>
</ul>


Revenue rose 49.8% YoY and the credit portfolio 75.2%, while adjusted EBITDA margin held at 9.6%; gross and net leverage increased to 3.39x and 1.65x.
Operating cash flow reached $3.66bn and FOCF $3.22bn, but lending and restricted funds absorbed most cash, leaving adjusted FCF at just $214mn.
Neutral maintained as spreads offer limited cushion for rising balance sheet intensity; we prefer the shorter-duration bond after the longer bond’s prior spread concession disappeared.


MercadoLibre 2Q26: Growth Outruns the Credit Profile

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>MercadoLibre reported its financial results for the second quarter of 2026 with net revenue exceeding $10 billion, marking a 50% year-over-year increase.</li><li>Income from operations was $683 million, reflecting an operating margin of 6.7%, consistent with the previous quarter.</li><li>The company emphasized a strategic decision to prioritize long-term growth and user engagement over near-term profitability, as evidenced by sustained investments across commerce and fintech segments.</li></ul>

MercadoLibre reported its financial results for the second quarter of 2026 with net revenue exceeding $10 billion, marking a 50% year-over-year increase.Income from operations was $683 million, reflecting an operating margin of 6.7%, consistent with the previous quarter.The company emphasized a strategic decision to prioritize long-term growth and user engagement over near-term profitability, as evidenced by sustained investments across commerce and fintech segments.

MercadoLibre Tops $10 Billion In Revenue — But Why Are Margins Still Shrinking?

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Thematic (Sector/Industry)

<p>Smartkarma hosted Cube's Co-Founder and Smartkarma Insight Provider, <a href="https://www.smartkarma.com/profiles/simon-torring" target="_blank" data-smartkarma-citation="accounts:47333" rel="noopener">Simon Torring</a> in an exclusive Webinar on 15 October '25. Simon shared key updates about Southeast Asia's e-commerce industry, including newly released H1 market data for the region's leading e-commerce platforms, from the firm's proprietary Tradewinds data offering. </p>
<p>Catch the full discussion below: </p>
<div style="display: flex; justify-content: center; align-items: center;"><iframe src="https://www.youtube.com/embed/ZGFdQFlxZvE?si=OgOI8xgl-8tXU_lV" width="560" height="315" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="allowfullscreen"></iframe></div>
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<p>For our next Webinar we are glad to welcome Cube's Co-Founder and Smartkarma Insight Provider, <a href="https://www.smartkarma.com/profiles/simon-torring" target="_blank" data-smartkarma-citation="accounts:47333" rel="noopener">Simon Torring.</a></p>
<p>In the upcoming webinar, Simon will share key updates about Southeast Asia's e-commerce industry, including newly released H1 market data for the region's leading e-commerce platforms, from the firm's proprietary Tradewinds data offering. <br>The session will also touch on key industry developments such as platform competition, promotional intensity, and Shopee's expansion in Brazil, along with an e-commerce industry forecast.</p>
<p>The webinar will include a live Q&amp;A session.</p>
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<h3>The Webinar will be hosted on Wednesday, 15 October 2025, 20:00 SGT.</h3>
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<h2><a href="https://www.smartkarma.com/home/webinar-registration-form-feb2025/" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
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<h3>About <a href="https://www.smartkarma.com/companies/cube-asia/research" target="_blank" rel="noopener">Cube</a>
</h3>
<p>Cube (formerly Cube Asia) offers granular market data and insights for online retail in Southeast Asia, helping brands and retail companies drive profitable growth. <br><strong>Why The Cube?</strong><br>The Cube offers 3 dimensions of granularity to help you get deep into the 1) geographies, 2) categories, and 3) types of data and insights you need for your business. <br>They operate a big-data machine that is continuously listening to public data sources and primary research, triangulating across thousands of data points using probabilistic modeling to produce an accurate and granular picture of Southeast Asia’s online retail landscape</p>

Smartkarma hosted Cube's Co-Founder and Smartkarma Insight Provider, Simon Torring in an exclusive Webinar on 15 October '25. Simon shared key updates about Southeast Asia's e-commerce industry, including newly released H1 market data for the region's leading e-commerce platforms, from the firm's proprietary Tradewinds data offering. 
Catch the full discussion below: 


For our next Webinar we are glad to welcome Cube's Co-Founder and Smartkarma Insight Provider, Simon Torring.
In the upcoming webinar, Simon will share key updates about Southeast Asia's e-commerce industry, including newly released H1 market data for the region's leading e-commerce platforms, from the firm's proprietary Tradewinds data offering.  The session will also touch on key industry developments such as platform competition, promotional intensity, and Shopee's expansion in Brazil, along with an e-commerce industry forecast.
The webinar will include a live Q&amp;A session.






The Webinar will be hosted on Wednesday, 15 October 2025, 20:00 SGT.












Register for the Webinar here












About Cube

Cube (formerly Cube Asia) offers granular market data and insights for online retail in Southeast Asia, helping brands and retail companies drive profitable growth.  Why The Cube? The Cube offers 3 dimensions of granularity to help you get deep into the 1) geographies, 2) categories, and 3) types of data and insights you need for your business.  They operate a big-data machine that is continuously listening to public data sources and primary research, triangulating across thousands of data points using probabilistic modeling to produce an accurate and granular picture of Southeast Asia’s online retail landscape

Smartkarma Webinar | Southeast Asia E-Commerce:  H1 Data, Key Developments & Forecast with Cube

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>LATAM remains a core and consensus overweight among active EM managers, with 85% of funds positioned ahead of the MSCI EM benchmark</li>
<li>LATAM exposure is concentrated in Brazil, Mexico, and Argentina, which together make up 90% of the region’s allocation.</li>
<li>Banorte remains the most widely held stock in the region, with Embraer SA and Gentera staging notable recoveries from the low positioning levels seen in 2021 and 2022.</li>
</ul>


LATAM remains a core and consensus overweight among active EM managers, with 85% of funds positioned ahead of the MSCI EM benchmark
LATAM exposure is concentrated in Brazil, Mexico, and Argentina, which together make up 90% of the region’s allocation.
Banorte remains the most widely held stock in the region, with Embraer SA and Gentera staging notable recoveries from the low positioning levels seen in 2021 and 2022.


LATAM:  The Conviction Overweight in a Benchmark-Driven World

Brazil

MercadoLibre, Inc. operates an online trading site for the Latin American markets. The Company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format. MercadoLibre offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

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MercadoLibre (MELI US)

MercadoLibre Prices US$1.0bn 5.850% 2036 Senior Unsecured Notes

MercadoLibre’s new 2036s improve liquidity but add leverage and offer no clear concession. We stay Neutral, prefer the 2031s, and view the new...

Leandro Gubler

MercadoLibre 2Q26: Growth Outruns the Credit Profile

MercadoLibre’s growth remains exceptional, but Fintech funding needs are pushing leverage higher and limiting cash conversion, keeping the credit...

Leandro Gubler

MercadoLibre Tops $10 Billion In Revenue — But Why Are Margins Still Shrinking?

MercadoLibre reported its financial results for the second quarter of 2026 with net revenue exceeding $10 billion, marking a 50% year-over-year...

Baptista Research

Smartkarma Webinar | Southeast Asia E-Commerce: H1 Data, Key Developments & Forecast with Cube

For our next Webinar we are glad to welcome Cube's Co-Founder and Smartkarma Insight Provider, Simon Torring. In the upcoming webinar, Simon will...

Smartkarma Research

LATAM: The Conviction Overweight in a Benchmark-Driven World

LATAM remains a core and consensus overweight among active EM managers, with 85% of funds positioned ahead of the MSCI EM benchmark

Steven Holden

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52-week Range

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