* Argentina publishes invitation on website
* Separate offer will be made of $1 billion global bond
* Starting Monday, Italian, U.S. investors can tender (Adds bond prices)
By Fiona Ortiz and Rika Otsuka
BUENOS AIRES/TOKYO, April 30 Argentina on Friday launched an offer to exchange new bonds and cash for $18.3 billion in defaulted debt and said it would issue a new $1 billion, seven-year global bond.
The swap of bonds left over from Argentina's historic 2002 default is a bid to clear up the country's reputation with investors so it can raise new debt at a time of tight financing.
Argentina published on a website (www.argentina2010offer.com) offers to investors to submit bonds starting on Monday in Europe and the United States and next Friday in Japan, where most of next week is a holiday.
The completion of the swap "is conditioned on Argentina's receipts of the proceeds from the concurrent cash offering," referring to the $1 billion 2017 global bond that will be launched in a separate offer, the exchange prospectus said.
To enter the exchange investors must accept a 66.3 percent loss on the face value of bonds they hold, though they will also receive new bonds or cash to compensate for back interest as well as securities that pay a yearly dividend when Argentina's economic growth rises above a certain level.
The offer, which was also updated on the Japanese securities regulator website [ID:nTOE63T07T], has two closing dates.
Large investors have until May 12 to tender bonds and receive the most favorable terms available to them while smaller investors have until June 7 to take the offer and are offered a cash element to sweeten the deal in their case.
The Argentine government hopes to announce a high acceptance rate -- it is aiming for a total acceptance rate of at least 60 percent -- after the May 12 deadline.
That could push up prices for Argentine bonds, which makes the value of the offer higher and could entice more small bondholders to take the deal before it closes in June.
"I'm seeing an 80 percent acceptance rate or perhaps even a bit more. If you participate in the exchange you get a coupon paid on 2011 and 2012 GDP. That is going to be very attractive," Alberto Bernal, head of research with Bulltick Capital Markets in Miami, told a local radio station.
Economy Minister Amado Boudou said Argentina, Latin America's No. 3 economy after Brazil and Mexico, hopes to price the new global bond with an annual yield of below 10 percent, despite turmoil on international markets due to Greece's debt woes.
Boudou said Argentina hopes to complete the sale of the new bond by May 12, but it depends on the pricing.
Argentine bond prices dropped on Friday as market attention focused on the debt crisis in Greece, which has dampened risk appetite and could keep Argentina from getting the pricing it wants on the new global bond.
In the over-the-counter market in Buenos Aires, Argentina's sovereign bond prices fell 0.3 percent on average, according to Reuters data, led by the peso-denominated Par bond, which was off 0.7 percent to ARPARD=RASL an ask price of 37.55.
Although Argentine bond prices have made big gains in recent months in anticipation of the swap, it continues to be one of the region's riskiest investments.
Ecuador and Venezuela are the only Latin American countries on JP Morgan's Emerging Market Bond Index 11EMJ with higher risk, measured as the spread between benchmark bonds and comparable U.S. Treasuries.
A HISTORIC DEFAULT
Argentina defaulted on some $100 billion in debt in 2002 during a deep economic and political crisis.
Three years later about 75 percent of bondholders entered a harsh restructuring -- taking a steep discount -- but the rest rejected the offer and many filed lawsuits to try to recover the full value of the debt.
The new swap, on similar terms to 2005, aims to neutralize those lawsuits, although some smaller bondholders have vowed to continue pursuing legal action, furious over Argentina's unwillingness to make full payment despite a strong recovery from its crisis at the beginning of the decade.
Argentina is offering slightly better terms to small investors to try to bring them into the deal.
Argentine officials are heading on a road show to pitch the deal to investors, in cities around the globe, including Rome on Monday, London on Tuesday and Wednesday and the following week in New York.
With debt obligations rising to an estimated $15 billion this year, and government spending growing at a pace of some 30 percent, Argentina is keen to return to international markets for the first time in eight years to raise debt.
(Editing by Andrew Hay)