Investor demand for the dollar-denominated bonds known as "Bonar V" totaled $2.54 billion. The paper carries a coupon rate of 7 percent.

In two earlier Bonar V bond auctions this year, Argentina sold $500 million in March at a yield of 8.36 percent and the same amount in May at a 8.09 percent yield.

The sale comes as several Latin American countries look to capitalize on increasing investor appetite for riskier assets. On Monday, Uruguay sold $500 million of its global bond due in 2022 and Colombia last week raised $1 billion with a ten-year bond.

Investors bought emerging market debt on Wednesday, narrowing spreads with benchmark U.S. Treasury bonds as the Beige Book survey boosted expectations the Federal Reserve could halt its rate hike campaign.

Overall spreads tightened 3 basis points to 195 points over comparable U.S. Treasuries on the JP Morgan Emerging Markets Bond Index Plus (EMBI+) . Spreads had widened since mid-May when a sell-off rocked emerging markets. Total returns rose 0.38 percent on the day.

Argentina's Economy Ministry said in a statement the cut-off price in the deal was $972.70 for every $1,000 and that offers ranged from a yield of 7.88 percent to 8.83 percent.

Analysts consulted by Reuters had expected the bond to be sold at a yield of at least 8.40 percent.

In March, the South American country ended a six-month hiatus from international credit markets after canceling a September 2005 auction of Boden 2015 bonds, saying yields were too high at 8.8 percent.

Since then, President Nestor Kirchner has also sought additional financing sources, making direct bond sales to the Venezuelan government and a number of Argentine state agencies.

Venezuela is one of the leading buyers of Argentine debt with purchases totaling some $3.5 billion.

Argentina restructured $100 billion in defaulted debt in early 2005, three years after a devastating economic crisis.