The process of securitization consists of the issuance of securities collateralized by a pool of assets through a special purpose entity, often under a VIE.

The Company securitizes financial assets associated with its credit cards and loans receivable portfolio. The Company’s securitization transactions typically involve the legal transfer of financial assets to bankruptcy remote special purpose entities (“SPEs”) or the acquisition of loans receivable portfolios through SPEs. The Company generally retains economic interests in the collateralized securitization transactions, which are retained in the form of subordinated interests. For accounting purposes, the Company is precluded from recording the transfers of assets in securitization transactions as sales or is required to consolidate the SPE.

The Company securitizes certain credit cards receivable related to user’s purchases through Argentine SPEs. According to the SPE contracts, the Company has determined that it has no obligation to absorb losses or the right to receive benefits of the SPE that could be significant because it does not retain any equity certificate of participation or subordinated interest in the SPEs. As the Company does not control the vehicle, its assets, liabilities, and related results are not consolidated in the Company’s financial statements.

Additionally, the Company intends to securitize certain credit cards receivable related to user’s purchases through Brazilian SPE. According to the SPE contract in place, the Company has determined that it has the obligation to absorb losses or the right to receive benefits of the SPE that could be significant because it retains subordinated interest in the SPEs. As the Company controls the vehicle, the assets, liabilities, and related results are consolidated in its financial statements.

The Company securitizes certain loans receivable through Brazilian, Argentine and Mexican SPEs, formed to securitize loans receivable provided by the Company to its users or purchased from financial institutions that grant loans to the Company’s users through Mercado Pago. According to the SPE contracts, the Company has determined that it has both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity that could be significant because it retains the equity certificates of participation, and would therefore also be consolidated. When the Company controls the vehicle, it accounts the securitization transactions as if they were secured financing and therefore the assets, liabilities, and related results are consolidated in its financial statements.
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The following table summarizes the Company’s collateralized debt as of March 31, 2022:


SPEs	Collateralized debt as of March 31, 2022	Interest rate	Currency	Maturity
Mercado Crédito I Brasil Fundo de Investimento Em Direitos Creditórios Não Padronizados	170	CDI + 2.50%	Brazilian Reais	May 2024
Fundo de Investimento Em DireitosCreditórios Arandu	211	CDI + 1.75%	Brazilian Reais	June 2023
Mercado Crédito Fundo de Investimento Em Direitos Creditórios Não Padronizado	23	CDI + 3.50%	Brazilian Reais	August 2023
Olimpia Fundo de Investimento Em Direitos Creditórios	109	CDI + 1.25%	Brazilian Reais	November 2024
Mercado Crédito II Brasil Fundo De Investimento Em Direitos Creditórios Nao Padronizados	172	CDI + 1.90%	Brazilian Reais	May 2028
Mercado Crédito X	2	Badlar rates plus 200 basis points with a min 30% and a max 45%	Argentine Pesos	June 2022
Mercado Crédito XI	6	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	September 2022
Mercado Crédito Consumo V	4	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	June 2022
Mercado Crédito Consumo VI	12	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	August 2022
Mercado Crédito Consumo VII	12	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	October 2022
Mercado Crédito Consumo VIII (*)	13	Badlar rates plus 200 basis points with a min 30% and a max 50%	Argentine Pesos	January 2023
Mercado Crédito XII	9	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	November 2022
Mercado Crédito XIII	14	Badlar rates plus 200 basis points with a min 30% and a max 46%	Argentine Pesos	April 2023
Mercado Crédito XIV(*)	17	Badlar rates plus 200 basis points with a min 30% and a max 48%	Argentine Pesos	February 2023
Fideicomiso de administración y fuente de pago CIB/3756	150	The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 1.9%	Mexican Pesos	October 2023
Fideicomiso de administración y fuente de pago CIB/3369	101	The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 3.0%	Mexican Pesos	April 2024

(*)	Mercado Crédito Consumo VIII and Mercado Crédito XIV trusts made a public bond offering in Argentine stock market on April 19, 2022 and May 4, 2022, respectively. As of March 31, 2022, Loans payables owned by these trusts were obtained through private placements.

This secured debt is issued by the SPEs and includes collateralized securities used to fund Mercado Credito business. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have recourse to the Company. Additionally, the cash flows generated by the SPEs are restricted to the payment of amounts due to third-party investors, but the Company retains the right to residual cash flows.
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The assets and liabilities of the SPEs are included in the Company’s interim condensed consolidated financial statements as of March 31, 2022 and December 31, 2021 as follows:



	March 31,		December 31,
	2022		2021
Assets	(In millions)
Current assets:
Restricted cash and cash equivalents	$	410	$	282
Credit cards receivable and other means of payments, net		284		278
Loans receivable, net		867		608
Total current assets		1,561		1,168
Non-current assets:
Long-term investments		15		13
Loans receivable, net		59		45
Total non-current assets		74		58
Total assets	$	1,635	$	1,226
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	3	$	1
Loans payable and other financial liabilities		109		77
Total current liabilities		112		78
Non-current liabilities:
Loans payable and other financial liabilities		916		674
Total non-current liabilities		916		674
Total liabilities	$	1,028	$	752