(Adds background)

April 3 (Reuters) – Telecom Italia on Monday became the first junk-rated European company to tap debt markets after the recent banking turmoil, raising 400 million euros ($435.64 million) through a sale of a new tranche of an existing bond due in 2028.

Weighed down by a 25 billion euro debt pile and dogged by stiff price competition in its domestic market, TIM is seeking to restructure its operations selling its most prized asset – the landline grid.

In January, TIM sold 850 million euros of the 2028 bond, which carries a 6.875% coupon, drawing more than 2.5 billion euros in demand. At 1550 GMT it yielded 6.88%, according to Refinitiv data.

The recent market turmoil triggered by troubles of U.S. lenders Silicon Valley Bank and Signature Bank has pushed euro zone bond yields up, prompting many issuers to stay away from markets.

Final guidance on the bond was set on a redemption price of 100%, according to TIM, down from initial indications of around 100.00-100.50%.

$1 = 0.9182 euros Reporting by Sara Rossi and Anirudh Saligrama; Editing by Valentina Za and Tomasz Janowski