Sept. 7 (Bloomberg) -- Argentina exchanged 16.7 billion pesos ($4.34 billion) worth of inflation-linked peso bonds as the government seeks to extend maturities and reduce its financing needs.

Economy Minister Amado Boudou and Finance Secretary Hernan Lorenzino announced the results of the exchange, which concluded today, at a news conference in Buenos Aires.

“This is an important sign of confidence in our policies with respect to financial markets” that include extending debt maturities, Boudou said.

Argentina will issue 4.4 billion pesos of bonds due in 2014 and 10.8 billion of pesos of notes maturing in 2015 in exchange for the inflation-linked debt, according to Lorenzino. The 2014 bonds will pay an interest rate of 2.75 percentage points above the central bank’s interbank rate, known as Badlar, while the 2015 bonds will pay 3 percentage points above the interbank rate.

Argentina’s borrowing requirements rose to $10.73 billion this year from $5.9 billion in 2008 as the global financial crisis throttled demand for commodity exports, according to an Aug. 20 report by Credit Suisse Group AG. Argentina’s borrowing needs will total $8.24 billion next year.

The bond swap, which had a participation rate of 76 percent, led to a nominal debt reduction of 2 billion pesos and saves 7.2 billion pesos in debt servicing over the next three years, Lorenzino said.

To contact the reporter on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net

Last Updated: September 7, 2009 18:02 EDT