Nairobi, March 13 -- Investors are likely to demand a premium above the 16 percent return the government is offering on a 10-year bond, testing the resolve of the Central Bank of Kenya (CBK) and the National Treasury to lower the interest cost on domestic debt.

This bond, alongside two reopened three- and five-year papers, make up the March 2024 issuance whose target is to raise a combined Sh40 billion. The three-year bond sale concluded last week, raising Sh34.3 billion, while the five and 10 year options are on sale until March 20.

The CBK took the rare step of setting the 10-year bond's coupon before the sale, departing from the routine of letting the market decide the return.

The move is seen by analysts as a signal to the market t...