Greece has averted the immediate risk of an uncontrolled default by winning strong acceptance from its private creditors for a bond swap deal which will eat into its mountainous public debt and clear the way for a new international bailout.
GREECE-BOND SWAP - After another nerve-wracking week, Greece woke to the news that the country's economy edged back from the abyss.
In the largest restructuring of debt in history the majority of private creditors owed money by Greece agreed to a bond swap which sees them accept steep losses on their investments.
The Greek finance minister said the deal was a significant day for the country.
GREEK FINANCE MINISTER, EVANGELOS VENIZELOS, SAYING:
"The country has already been relieved of a 105 billion euro debt, 50 percent of GDP. This day is truly historic, for the parliament, for the people, for the Greek economy."
The creditors appeared to have little choice, because if Greece went bankrupt they'd get nothing.
With the deal in place the EU and IMF are now likely to approve the 130 billion euros of emergency funding Greece's crippled economy desperately needs.
Petrakis Panagiotis is from the University of Athens.
ASSOCIATE PROFESSOR OF DEPARTMENT OF ECONOMICS AT THE UNIVERSITY OF ATHENS, PETRAKIS PANAGIOTIS SAYING:
"The Greek people and the foreigners will start to realise there is a stable situation. We are within euro. This is maybe the most important message of the deal."
The deal is of massive relief to Greece's struggling banking systeil om.
Michalis Massourakis is chief economist at Alpha Bank.
MICHALIS MASSOURAKIS, ALPHA BANK CHIEF ECONOMIST SAYING:
"We expect this to bring back some of the deposits to the banking system that have left and therefore to kickstart if you like a process of recovery of the Greek economy that will make the implementation of the targets in the budget much easier."
Not everyone shares that view.
As Europe's biggest economy Germany has shouldered the lion's share of the Greek bailout burden.
Joerg Kraemer is the main economist at Commerzbank and says the latest deal is only delaying the inevitable.
MAIN ECONOMIST OF COMMERZBANK, JOERG KRAEMER, SAYING:
"The crisis is not over yet. The European Union has paid time in favour of Greece. But when Greece continues not to implement the promised reforms that it's only a question of time until new problems will pop up. And especially in the second half of the year I see a probability of above 50 percent that the European Union is so frustrated that it stops releasing fresh money to Greece."
The EU and IMF have demanded deep budget cuts in return for helping Greece.
They've led to significant social unrest as the country's unemployment surges beyond one in five.
Spanish and Italian bond yields fell following the Greek annoucnement, but Portugal's went up as investors look for Europe's next weakest link.
Andrew Potter, Reuters