(Bloomberg) -- El Salvador’s bonds rallied after the nation disclosed plans to reduce its borrowing costs by swapping debt and promoting sustainability.

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Notes across the country’s curve gained Monday, with those due in 2041 advancing 2.8 cents to 85.9 cents on the dollar, the highest in more than three years, according to indicative pricing data collected by Bloomberg.

The Latin American nation asked holders of nine dollar-denominated transactions to tender their notes, according to a statement late Friday. Should the swap go ahead, El Salvador will issue new notes that will be purchased by a special purpose entity, funded by using a loan from a unit of JPMorgan Chase & Co.

“This transaction is part of a refinancing transaction to realize savings and promote certain conservation and sustainability efforts of El Salvador,” the country said in the statement, without providing details such as the specific projects being funded with the transaction.

In so-called debt-for-nature swaps, a portion of existing debt is refinanced by selling a new bond at cheaper borrowing terms, with a chunk of the savings going toward nature conservation or wider sustainable goals. It’s a process gaining momentum in emerging-market countries that face expensive access to financing, with Ecuador and Barbados currently working on deals.

Such swaps typically take place when the existing debt trades at a discount, and they usually involve guarantees on the new bond from multilateral lenders such as the Inter-American Development Bank or the US International Development Finance Corp.

These backstops allow junk-rated countries to reduce their borrowing costs. The move by El Salvador follows Moody’s Ratings upgrading its sovereign rating in May by two steps to Caa1, or seven levels below investment grade.

“The tender looks quite attractive, as El Salvador is offering to pay a premium across all tendered references,” said Alpha Credit Advisors Ltd. partner Cesar Fernandez. “The country is following the lead of other emerging-markets countries by using the debt-for-nature swap mechanism.”

The swap tender expires on Oct. 10, and the country will announce the size of the transaction on Oct. 15, according to the statement. A representative for JPMorgan, which is also managing the debt tender, declined to comment. A spokesperson for El Salvador’s government didn’t immediately respond to a request for comment.

Last year, Ecuador completed the largest debt-for-nature deal of its kind, a transaction that is expected to generate more than $1 billion worth of savings for the government while helping to protect habitats in the Galapagos Islands.

(Recasts with bond move, adds investor comment.)

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