(Adds amount of bids, details on sale)
By Sarah Marsh
BUENOS AIRES, April 21 (Reuters) - Cash-strapped Argentina sold $1.4159 billion worth of local law Bonar24 bonds in a top-up on Tuesday, receiving bids for more than three times the amount on offer, the Economy Ministry said.
The strong demand, despite risks to payment of the bonds stemming from Argentina's long-running battle with holdout creditors, suggests investors are keen to gain exposure to the country ahead of elections in October.
Many expect the vote to usher in a more market-friendly government that will settle the dispute.
The results also show that, facing low foreign reserves, Argentina can issue paper to finance itself, albeit at high yields. The Bonar24 carries a 8.75 percent coupon.
The credit markets pariah, which defaulted on $100 billion in 2002, had said it would offer $500 million worth of the notes but could increase that amount depending on the demand. It received bids worth $1.879 billion of bonds, the ministry said in a statement.
Argentina has sought to regain access to international credit markets over the past year as its foreign reserves tumbled to new lows and the economy teetered on the brink of recession after nearly a decade of solid growth.
Its legal fight with hedge funds over debt it defaulted on in 2002 has hampered efforts, even leading Argentina to default on bonds it had restructured in 2005 and 2010 swaps.
A ruling by a U.S. court last year stopped Argentina from servicing that restructured debt unless it also paid the funds who rejected the swaps.
In March, the same U.S. court asked Deutsche Bank and JP Morgan, bookrunners in a planned sale of Bonar24s to produce documents on the deal. The two banks promptly backed away, forcing Argentina to shelve the issuance.
The Economy Ministry said on Monday there were no financial intermediaries helping with this auction.
Deutsche Bank, along with other intermediaries, is also acting as an agent, taking any enquiries from clients interested in buying the paper, said a person familiar with the matter.
NML Capital, the lead holdout creditor suing Argentina for full repayment of its defaulted bonds, has suggested it could take legal action over the sale.
"We are closely scrutinizing this highly unusual transaction to determine what enforcement actions are appropriate," said Robert Cohen, an attorney at NML Capital, said in a statement. (Additional reporting by Walter Bianchi in Buenos Aires and Daniel Bases in New York, and Paul Kilby for Thomson Reuters IFR; Editing by Chris Reese and Alan Crosby)