(Adds context, amount of outstanding Lebac stock)
BUENOS AIRES, July 5 (Reuters) - Argentina sold $422 million in one-year, dollar-denominated Treasury notes at a nominal annual interest rate of 5.5 percent, the Treasury Ministry said on Thursday, in an auction that failed to meet market expectations.
In the days leading up to the sale, traders had said they expected the government to sell upwards of $1 billion in debt through the auction, which would have reduced downward pressure on the peso currency.
The ministry said swaps of central bank debt notes known as Lebacs accounted for $295 million of the total. The rest came from cash offers. The government received a total of $481 million in offers.
Argentina pledged to reduce the outstanding stock of Lebac notes as part of a $50 billion standby financing deal with the International Monetary Fund (IMF) last month. A run on the peso, which has lost more than 30 percent of its value this year, prompted the South American country to turn to the IMF.
The outstanding stock of Lebacs is approximately $37 billion.
The government had announced the auction earlier this week. It was initially scheduled to conclude on Tuesday, but the Ministry extended the deadline for receiving offers to Thursday "in response to the request from potential participants and in virtue of the short time frame." (Reporting by Luc Cohen and Jorge Otaola; editing by Phil Berlowitz and Tom Brown)