Xiaomi IPO Drives Up Hong Kong Funding Costs by Most in a Decade

(Bloomberg) -- Borrowing costs in Hong Kong spiked, with the cost of two-week money surging by the most in a decade, as Xiaomi Corp.’s share sale stoked the risk of a cash crunch.

The Hong Kong interbank offered rate for two-week funds jumped 33 basis points to 1.75 percent on Thursday, the steepest increase and highest level since 2008. One-month Hibor climbed eight basis points to 1.85 percent, a 17th consecutive daily increase.

Big initial public offerings often drive up funding costs in Hong Kong because brokerages rush to reserve money for margin loans, sucking that cash out of the financial system. Xiaomi expects to take orders for its shares from Thursday through June 28, with the Chinese smartphone maker seeking to raise as much as $6.1 billion in what is set to be the world’s biggest debut in nearly two years.

Xiaomi IPO Drives Up Hong Kong Funding Costs by Most in a Decade