Mercado Pago, the financial arm of Mercado Libre, led in Mexico by Pedro Rivas, carried out its first debt placement in the Mexican stock market through the Institutional Stock Exchange (BIVA). The operation, executed by Mercado Lending, the company’s Sofom, raised 3,750 million pesos, equivalent to 75% of the maximum amount of 5,000 million pesos contemplated in the offer.
The issue was structured in two tranches under the modality of communicating vessels: the first, MELIMX 26, placed 1,050 million pesos for three years with a variable rate referenced to the TIIE for One-Day Funding plus 130 basis points; The second, MELIMX 26-2, placed 2,700 million pesos for five years with a fixed rate and a coupon of 10.54%. Both tranches received the highest credit rating: ‘AAA(mex)’ from Fitch Ratings and ‘HR AAA’ from HR Ratings.
“This first issuance of CEBURES represents a milestone for Mercado Libre and Mercado Pago in Mexico, and reflects investors’ confidence in our financial solidity, in the company’s business model and in its execution capacity. The transaction allows us to diversify funding sources and extend the maturity profile, with the aim of expanding access to credit, accompanying the growth of more people and businesses in the country, and thus continue democratizing financial services,” said Daniel Ruiz, CFO of Mercado Libre México.
The operation also has a Credit Support Agreement signed by Mercado Libre in August, although the instrument does not constitute a guarantee of the obligations of the certificates and the holders have no direct action against the parent company.
The banking license as a catalyst: the thesis of Dolomiti Capital
The issue attracted Dolomiti Capital, a fund specialized in Mexican fixed income markets led by Manuel Ballesteros, which participated in the variable rate tranche with an order at 126 basis points, although it received assignment to the 130 bp in which MELIMX 26 was finally placed.
The fund’s investment thesis rests on a specific scenario: that Mercado Pago obtains its banking license from the National Banking and Securities Commission (CNBV), a request submitted in 2024 and still pending authorization, and that Mercado Lending merges with the resulting bank during the life of the bond.
“Our base scenario is that Mercado Pago obtains its banking license and Mercado Lending merges with the bank during the life of this bond. After the merger, the issuer would be a AAA bank financed by deposits,” Dolomiti explained in a report on the operation.
The argument has a logic of spread compression: AAA bank bonds at variable rates are currently trading with spreads of between 35 and 50 basis points over the Funding TIIE, compared to 130 bp for MELIMX 26. If the merger is completed, Dolomiti estimates that the spread could be compressed to less than 100 bp, generating an additional capital gain to the variable yield. According to the fund’s analysis, Mercado Lending maintains a loan portfolio close to 58,000 million pesos, with an annual growth of 50%.
Sofom on a bank scale: the portfolio and business model in Mexico
Mercado Pago operates in Mexico through Mercado Lending with an offer that includes credit cards, savings products, personal loans, business financing and point-of-sale terminals. The placement in BIVA is part of a larger debt program with which the company seeks to diversify its financing sources, and anticipates new issues on the same stock exchange.
The Mercado Libre support agreement, which Dolomiti characterizes as a “letter of maintenance, not a guarantee,” ends if Sofom merges with a bank, making the eventual banking license the central event that will redefine both the legal structure of the operation and the market conditions under which the debt issued this week will be quoted, according to statements collected by El Cronista México.
