(Bloomberg) -- Japan will sell sovereign transition bonds for the second time on Tuesday, but investor demand may lag the debut deal as central bank officials send more signals that an interest-rate hike is coming.

The finance ministry is planning to price about ¥800 billion ($5.3 billion) of five-year notes that fund efforts to reduce carbon emissions in industries at 12:35 p.m. So-called when-issued orders for the bonds though before the auction had a 0.355% yield that was barely lower than 0.356% for regular government notes maturing on the same day. 

That suggests that there wasn’t much extra investor demand for the bonds that offer environmental benefits. The debut 10-year transition debt that Japan’s government sold on Feb. 14 initially was marketed with a ‘greenium’ of about five basis points, but that spread tightened to around one basis point by the time the bonds priced.

Pre-auction orders for the five-year note “may suggest weak demand,” said Kenji Nobuto, general manager of the global equity and fixed income investment department at Japan Post Insurance Co. The insurer bought the 10-year transition note but isn’t planning to purchase the five-year debt as the firm’s investment targets don’t include that duration, he said.

Since the 10-year bond sale, Bank of Japan Governor Kazuo Ueda last week signaled confidence over the prospects of achieving stable inflation. Data on Tuesday showed that Japan’s benchmark inflation gauge slowed less than expected in January, supporting the case for the BOJ to continue moving toward ending subzero rates.

Overnight-indexed swaps point to a 76% chance that the BOJ will end negative rates by April. 

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