The two-year paper, expected to raise Sh40 billion, will be on sale until April 17. The paper was first sold last year when it settled at an interest rate of 16.97 percent.

The auction of the five- and 10-year bonds, expected to raise Sh25 billion, will be closed on April 4 or earlier upon hitting the target, whichever comes first.

For the two bonds, the government’s fiscal agent will be seeking part of the Sh37.1 billion that it rejected when they were sold earlier this month when investors sought higher interest rates.

The two securities are being offered with the same returns obtained in the recent auction, giving investors another opportunity to participate at a time when there are wide expectations that interest rates have peaked and could decline going forward.

Total investor bids from the papers’ recent auction reached Sh59.7 billion but the CBK accepted only Sh22.6 billion, rejecting Sh37.1 billion as investors sought higher returns than those signalled by the institution.

Investors bid Sh23.8 billion on the 10 year paper at an average of 17.75 percent despite the CBK publishing guidance of a 16 percent return on the security which was the first long term paper to be sold in more than a year.

Only Sh4.8 billion of bids on security were accepted at an average rate of 16.5 percent.

The five-year bond attracted bids of Sh35.8 billion at an average rate of 18.59 percent. The CBK took Sh17.7 billion of the offers at a slightly lower rate of 18.41 percent.

Investors participating in the tap sale will take the same returns adjusted for accrued interest since the bonds’ auction on March 25.

The CBK has stepped up its rejection of expensive investor bids in recent weeks as it seeks to put brakes on the significant growth in interest rates over the past year with the view of driving down government debt service costs.

Interest rates on new treasuries hit a high of 18.46 percent last month when the 8.5-year infrastructure bond –which will partial redemptions along the way— was auctioned at an interest rate of 18.46 percent.

The apex bank is expected to find impetus in its quest from the reduced Eurobond maturity risks where investors had attached a higher risk premium on securities issued by the government over default concerns.

The National Treasury recently set down its target for net domestic borrowing for the 2023/24 financial year to Sh422.7 billion from an earlier Sh474.5 billion, signalling a reduction in reliance on the domestic market for budget funding.