Sixty per cent of low-income countries are in “debt distress” or at high risk of it. The current sovereign debt restructuring framework leads to unsustainable debts over the long term, a continuing repeat of the crisis/debt restructuring cycle, economic stagnation and poverty in low-income countries. This paper proposes that the International Financial Institutions (IFI) provide the funding needed for over-indebted low-income countries to achieve a more durable resolution of their debt problems following the Brady Plan precedent. Two proposed bond exchange structures provide a new template for sovereign debt restructuring. They simplify the Brady concept and increase the liquidity of the restructured instruments significantly. The entire stock of the government’s external bonds will be converted into an equal nominal amount of 25–40-year debt with a 3-3.5% interest rate. The result should reduce the net present value of the debt by more than 50% and place the debt on a sustainable path. [….]