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Securitization Transactions | 6 Months Ended
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Jun. 30, 2019
Securitization Transactions [Abstract] |
Securitization Transactions | 11. Securitization Transactions 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 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 loans receivable through Brazilian and Argentine 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. As of June 30, 2019, the carrying value of the Brazilian collateralized debt was $55,395 thousands, composed of: 1) $15,855 thousands, which bears interest at a rate of Brazilian DI plus 3.5% per annum for a term of 36 months, due in June 2021 and 2) $39,540 thousands, which bears interest at a rate of Brazilian DI plus 3.25% per annum for a term of 30 months, due in May 2021. The carrying value of the Argentine collateralized debt was $9,266 thousands, composed of: 1) $3,123 thousands bearing interest at a variable rate equivalent to the BADLAR rate plus 200 basis points with a minimum 33% and a maximum 48% nominal rate per annum for a term of 8 months, due in October 2019, 2) $397 thousands bearing interest at a variable rate equivalent to the BADLAR rate plus 200 basis points with a minimum 30% and a maximum 45% nominal rate per annum for a term of 12 months, due in July 2019 and 3) $5,746 thousands bearing interest at a variable rate equivalent to the BADLAR rate plus 200 basis points with a minimum 37% and a maximum 52% nominal rate per annum for a term of 8 months due in January 2020. 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. ‎ The assets and liabilities of the SPEs are included in the Company’s interim condensed consolidated financial statements as of June 30, 2019 and December 31, 2018 as follows:
| June 30, |  | December 31,
| 2019 |  | 2018
Assets |  | (in thousands) |  |  | (in thousands)
Current assets: |  |  |  |  |
Restricted cash and cash equivalents | $ | 9,660 |  | $ | 24,363
Loans receivable, net |  | 87,263 |  |  | 51,471
Total current assets |  | 96,923 |  |  | 75,834
Total assets | $ | 96,923 |  | $ | 75,834
Liabilities |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable and accrued expenses | $ | 115 |  | $ | 113
Loans payable and other financial liabilities |  | 9,875 |  |  | 7,539
Total current liabilities |  | 9,990 |  |  | 7,652
Non-current liabilities: |  |  |  |  |
Loans payable and other financial liabilities |  | 54,786 |  |  | 46,441
Total non-current liabilities |  | 54,786 |  |  | 46,441
Total liabilities | $ | 64,776 |  | $ | 54,093

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