EM LATAM CREDIT: Mercado Libre 1Q 2025 Earnings Results Beat: Neutral take
MercadoLibre (MELI; Ba1 /BB+ pos /BBB-)
• Uruguay based Latin America online trading site MercadoLibre reported better than expected earnings, but trading levels already reflect investment grade ratings.
• Revenues rose 37%, operating income grew 45% and operating margin expanded 700bps from 12.2 to 12.9% YoY. Sequentially, results were less stellar with operating income falling 7% and operating margin dropping from 13.5% to 12.9%.
• Reported net leverage ticked up to .79x from .63x last quarter and .48x a year ago relating to funding for a new financial product launch called Mercado Pago.
• Last month the company announced it was expanding with a planned investment of BRL34bn (USD6.4bn) in Brazil in 2025. Please see our previous post for more information:
https://mni.marketnews.com/3EHGuWE
• Brazil already comprises a little more than half of total revenues with the remainder split mostly between Mexico and Argentina.
• MELI 2031s were last quoted T+149bps, 5bps tighter MTD and 16bps wider YTD.
• MELI 2031s already trade about 10 bps through higher rated Embraer (EMBRBZ; Baa3 /BBB-/BBB-) 2030s and about 30 bps through the Brazil sovereign (Ba1 pos/BB /BB).
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US STOCKS: Early Equities Roundup: Off Morning Highs, No Near Term Exemptions
- Stocks have bounced amid hopes of progress on US tariff negotiations early Tuesday, still off last week's levels prior to Pres Trump's sweeping tariff announcement. Indexes pared gains at midmorning after Pres Trump said he would not do tariff exemptions in the near term.
- Currently, the DJIA trades up 1000.21 points (2.63%) at 37,814.14 (39,426.60 high), S&P E-Minis up 142 points (2.79%) at 5078.5 (5,305.25 high), Nasdaq up 513.8 points (3.3%) at 15551.09 (16,316.16 high).
- Information Technology and Financial sectors outperformed in the first half, chip stocks and hardware makers buoyed the Tech sector: Palantir Technologies +9.75%, Western Digital +9.58%, Broadcom +8.99%, Arista Networks +7.86% and NVIDIA +7.53%.
- Banks led gainers in the Financial sector: JPMorgan Chase +5.60%, Citigroup +5.59%, Capital One Financial +5.41%, Charles Schwab +5.38% and Discover Financial Services +5.36%.
- Reminder, banks kick off the latest earnings cycle this Friday with Bank of New York Mellon, Wells Fargo & Co, JPMorgan Chase and Morgan Stanley reporting.
- On the flipside, Materials and Energy sectors underperformed in the first half, Albemarle -1.58%, International Paper -0.32% weighed on the Materials sector while oil and gas shares hampered gains in the Energy sector: APA Corp -0.53%, EOG Resources +0.12%, Occidental Petroleum +0.59%, Devon Energy +0.59% and ConocoPhillips +0.77%.
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP4bln of the 4.50% Mar-35 Gilt (ISIN: GB00BT7J0027)at its auction next Tuesday, April 15.
STIR: BLOCK UPDATE: Jun'25 SOFR Call Spread
- 37,000 SFRM5 96.50/97.25 call spds from 5.0 to 4.5 ref 96.015 to 96.00
