Argentina borrowed $16.5 billion on Tuesday in its triumphant return to international credit markets 15 years after a disastrous default, the government said.

Finance Minister Alfonso Prat-Gay said investors bought Argentine sovereign bonds worth $16.5 billion in the country's first debt auction since the default in 2001.

"The 2001 default phase is now definitively closed," Prat-Gay told a news conference.

He said investors accepted an average rate of return of 7.2 percent on the bonds, which have maturities ranging from three to 30 years.

That was a higher rate than on much South American sovereign debt, reflecting lingering uncertainty about Argentina's financial fortunes after 12 years cut off from the markets.

Prat-Gay earlier said the government received demand for $60 billion in bonds, several times bigger than the supply in the auction, which was initially forecast to raise between $12.5 billion and $15.0 billion.

The country will use part of the borrowed money to settle a 15-year lawsuit by US investment funds known as "holdouts" who demanded full repayment of debts dating to the default.

"On Friday when the funds (from the bonds) are credited to our account, we will pay $9.3 billion" to those creditors, the minister said.

"We have reached 220 agreements with holdout investors of various sizes."

Argentina's leftist ex-president Cristina Kirchner branded the holdouts "vultures" and refused to negotiate with them, leading Argentina to be seen as a pariah on financial markets.

Her successor, conservative President Mauricio Macri, has been looking to bring Argentina back into the international fold since taking power in December.

He is looking to boost Argentina's flagging economy and has been scrapping Kirchner's protectionist policies.

That has sparked protests from Argentines who say his reforms are hurting poor families' spending power.