Chinese smartphone maker Xiaomi Corp. is preparing a share sale that will raise at least $10 billion, people familiar with the matter said. The city’s red-hot IPO market usually sees offerings oversubscribed -- sometimes by hundreds of times -- as investors borrow heavily to place orders.

For clues on how this may play out, consider that China Literature Ltd.’s $1.1 billion IPO last year locked up a third of the city’s monetary base, the South China Morning Post reported at the time. When Ping An Good Doctor started taking orders from retail investors for its shares last week, the key interbank interest rate jumped by the most in nearly a decade. A higher Hibor rate affects the cost of everything from housing mortgages to corporate loans; and if everyone’s using their margin loans to subscribe for an IPO, that can mean less money sloshing around in the city’s $5.6 trillion equity market.

“We could expect a very notable increase in Hibor if an IPO is very oversubscribed,” said Ronald Man, a strategist at Bank of America Merrill Lynch in Hong Kong.

Hong Kong interbank rates are already climbing after years at ultra-low levels as the city’s monetary authority buys local dollars to defend a currency peg, thereby sucking up liquidity. Beijing-based Xiaomi declined to comment on the IPO, which could be the largest worldwide since Chinese e-commerce giant Alibaba Group Holding Ltd. raised $25 billion in its 2014 debut in New York. Xiaomi may submit its IPO application this week and may list as early as end-June, the Hong Kong Economic Journal reported, citing unidentified people.

Demand is likely to be strong for Xiaomi’s offer. The world’s fifth-largest smartphone vendor, the company has hinted at strong profitability in its other services, which range from video streaming to online financing. Xiaomi also makes money on advertising via its own apps and by providing paid subscriptions for premium entertainment content such as web videos and books.

More big IPOs may be on the way after the Hong Kong stock exchange approved the biggest change to its listing rules in two decades, paving the way for technology firms with dual-class share structures to list in the city.

On the upside, a spike in interbank rates may give the Hong Kong dollar a brief boost. The city’s currency tends to strengthen up to two weeks before big listings as liquidity tightens amid subscriptions and funds get locked up, according to Goldman Sachs Group Inc. The Hong Kong dollar weakened 0.02 percent to 7.8488 per dollar on Monday.

— With assistance by Kana Nishizawa, Tian Chen, Crystal Tse, and Yuan Gao

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