Alibaba's US$20b Hong Kong IPO could pressure rates up

Hong Kong’s short-term rates have tumbled since 2018 amidst tepid demand.

A Bloomberg report revealed that Alibaba Group Holding’s planned secondary US$20b share sale could push Hong Kong’s borrowing rates up and strengthen the local dollar.

China’s largest company is considering a listing in Hong Kong, people familiar with the matter said, potentially rivaling AIA Group Ltd.’s initial public offering (IPO) in 2010 as the city’s biggest-ever share sale.

Also read: Hong Kong's IPO haul may hit up to $230b in 2019

Liquidity would tighten in the weeks around a listing due to demand for cash from subscribers. Alibaba raised a record US$25b in its 2014 debut in New York.

Hong Kong borrowing costs climbed in the lead up to smartphone-maker Xiaomi Corp.’s IPO in 2018, with the one-month interbank rate hitting its highest since October 2008. Short-term rates then tumbled amidst tepid demand.

Read the full report here.