Following Emu, bond traders are scouring non-euro EU countries for the next convergence play hot-spots. Now that the main convergence-play currencies of recent times - Italy, Spain, Ireland and Portugal - are in the euro club, those non-euro countries that might join the euro over the next few years are attracting attention. Greece has emerged ahead of the UK, Sweden and Denmark as the most popular source of convergence plays.
Phyllis Reed, government bond economist at Barclays Capital, says: "The Greeks are the best value as their spreads are high - just over 250 basis points - in relative and absolute terms, and they are most likely to join the euro next. The Greek government has a programme in place to qualify for Emu by 2001 and it looks as if they will achieve this. Given the UK electoral cycle, Emu will probably not happen until 2002. The same can be said for Scandinavia. Spreads in Scandinavia look too low to cause much excitement in convergence plays, and though the UK still offers opportunities you might be better off with swaps."
But traders are not ignoring Denmark and Sweden entirely. Some are playing in those markets through euro-financed trades.