Italy's 2-yr borrowing costs rise to highest since Dec. 2012

MILAN, March 25 Mon Mar 25, 2013 6:26am EDT

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MILAN, March 25 (Reuters) - Italy had to pay a slightly higher yield at a 2-year-debt sale on Monday as investors asked for compensation in response to a domestic political outlook that still remains unclear one month after a parliamentary election.

A last-ditch agreement signed by Cyprus to save its euro zone membership, however, helped Italy sell 3.825 billion euros debt, just below its top planned 4 billion euros.

The treasury sold 2.825 billion euros of two-year zero-coupon bonds, with a yield of 1.75 percent, the highest level since December 2012.

Italy had paid a rate of 1.68 percent on the same bond at an auction on February 25 which took place just few hours before the result of an inconclusive domestic election. Bid-to-cover had been 1.65 at the end-of-February sale.

On Monday Italy offered also two inflation-linked BTPei bonds maturing September 2018 and September 2023 respectively.