For a bank treasury desk considering the Ministry of Finance’s renminbi sovereign bonds issued through Hong Kong’s Central Moneymarkets Unit on October 20, the tempting funding number sits in another currency (the cheaper money comes with a different repayment obligation).

One-month HIBOR fixed at 2.68% on October 21, down 21 basis points since September 8, according to our money panel. The aggregate balance barely moved over that period, from HK$54.0 billion to HK$54.1 billion. Hong Kong dollar borrowing became cheaper without a comparable increase in that balance.

So the desk has a purchase decision with two funding calculations. The HKMA’s October 20 Exchange Fund Bills tender results belong on the same screen as the renminbi sovereign issue. Renminbi sovereign bonds and Hong Kong dollar bills still produce cash flows in different currencies.

For the sovereign bonds, the relevant comparison is the issue yield against the desk’s renminbi funding cost, including conversion and hedging if it starts with Hong Kong dollars. A 21-basis-point fall in HIBOR improves that purchase’s economics only to the extent that the saving survives those costs.