Argentina Is Unlikely Home of the Best Bond in Emerging Markets

Tuesday, September 10, 2019

By Justin Villamil and Pablo Rosendo Gonzalez

With Argentine markets in meltdown as investors look ahead to an all-but-certain election loss for President Mauricio Macri, one bond stands out as a surprise winner amid the carnage.

A convertible note from MercadoLibre Inc., the Buenos Aires-based e-commerce company with operations across Latin America, has trounced its peers with a 72% return this year. That’s the best performance in all of emerging markets.

While notes from companies such as oil producer YPF SA and phone carrier Telecom Argentina SA tanked last month, MercadoLibre has avoided the worst of Argentina’s mess by relying on its home country for less than a quarter of its sales, while getting a boost from paying many of its workers in rapidly depreciating pesos. Analysts are also encouraged by the company’s plan to grow its business processing payments for other retailers, believing it could make MercadoLibre the dominant player in the region for years to come.

Photo courtesy of Juanedc.

Source: Bloomberg (link opens in a new window)