The private creditors who hold Greek bonds look resigned to the idea that they are going to take a big hit on their investments.

Last week, the bond holders gave what they called their "best offer" to the Greek government regarding the interest rate Athens would pay on the new bonds. This offer was rejected by the EU who are overseeing the process and must approve any deal if Greece is to get the $130 billion in bailout funds.

Now, with a deadline looming, the two sides appear close to a deal. In essence, the bond holders are willing to take a 50% loss in lieu of a 100% loss as a result of a Greek default.

Reuters:

Greece and its private creditors worked on stitching together the final bits of a complex debt swap agreement Saturday, amid growing optimism a deal will be clinched in time to avert an unruly default.

After weeks of muddling through round after round of inconclusive talks, the negotiations appear to be in their final phase, though it was unclear if a preliminary deal could be secured in time for Monday's European Union summit.

Greek officials and Charles Dallara, chief negotiator for banks and insurers, left Saturday's negotiating session without making any comment. Earlier, Prime Minister Lucas Papademos told Reuters he expected the deal to be concluded within days.

Still, for Athens, progress on the debt swap front is at risk of being overshadowed by increasingly problematic talks with its foreign lenders, whose inspectors are in town demanding unpopular reforms that no politician wants to be linked to.

"Today will be another tough day," said George Karatzaferis, leader of the far-right LAOS party, one of three parties in Papademos's emergency coalition government. "We will see whether we can bear the burden that lies ahead."

Even with this deal, the Greeks are far from being out of the woods. The EU is insisting that it be able to take control of the Greek budget and impose far more stringent austerity measures on the country than the current government feels is politically possible. This will no doubt lead to civil unrest as many Greeks already feel they are stretched to the limit.

But the immediate crisis can be avoided with this credit deal. This has calmed markets both in Europe and America, although the crisis could grow hot again at any time.