MercadoLibre Plans to Sell Dollar Bonds as Company Looks to 2021

(Bloomberg) -- MercadoLibre Inc., Latin America’s largest e-commerce retailer, plans to sell dollar bonds, taking advantage of record low global rates and pandemic-stoked demand for virtual sales.

MercadoLibre thrived in 2020 as online purchases soared. Full-year net income probably swung to $76 million from a 2019 loss. Its shares more than doubled, bringing the firm’s market capitalization to about $82 billion. To speed deliveries, the company even turned to airplanes, contracting eight cargo carriers in Brazil and Mexico.

“MercadoLibre has been investing heavily over the past couple of years and now it’s time for them to benefit from that and prove that they can grow margins.” said Lorena Reich, an analyst at Lucror Analytics in Buenos Aires. “The bonds will be in high demand.”

A spokesperson for MercadoLibre declined to comment on the details of the sale. The Buenos Aires-based firm sold $880 million of dollar-denominated convertible bonds in 2018.

MercadoLibre is expected to sell about $1 billion of debt in two tranches that will mature in five to 10 years, according to Moody’s Investor Service, which said it will rate the bonds Ba1. One tranche will be related to ESG and sustainability, with proceeds reserved for green or social corporate projects. The other tranche may be used to refinance a portion of the company’s convertible notes.

“The company has solid liquidity and broad presence and competitive position in other countries in the region, which allows financial flexibility to sustain economic downturns,” Moody’s wrote. Its corporate governance standards, diverse ownership structure and Nasdaq listing contributed to the rating, Moody’s said.

Fitch Ratings Inc. also rated the notes BB+, according to a statement.

MercadoLibre hired BNP Paribas SA, BofA Securities Inc, Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. to arrange calls with investors starting this week.

The company said in November that it would open five logistics centers in Brazil as merchandise volumes surged and it seeks to reduce delivery times. Mercadolibre, which said it was investing a record 4 billion reais ($716 million) in 2020, plans to beat that number in 2021, Fernando Yunes, the MercadoLibre’s country manager for Brazil said in October.

By Scott Squires