Hong Kong Haven in Cash Squeeze Eases Dim Sum Lull: China Credit

A slump in Hong Kong’s benchmark yuan interest rates, even as a cash squeeze inflates onshore borrowing costs, is laying the foundation for a revival of the weakest Dim Sum market on record.

The three-month renminbi Hong Kong interbank offered rate, known as yuan Hibor, has fallen 157 basis points since its June debut and touched a record low of 2.44 percent on Oct. 29, according to the Treasury Markets Association. Its discount over the similar gauge in Shanghai widened to 222 basis points this week, from 166 at the beginning of June. Germany’s Landeskreditbank Baden-Wuerttemberg Foerderbank, or L-Bank, raised 250 million yuan ($41 million) selling the first floating-rate Dim Sum linked to three-month yuan Hibor since the fixing was introduced.