The prospect of conversion to the euro-the common currency of the European Union scheduled for release in 1999-helped boost the demand for Fannie Mae's second Benchmark note issue last week.

Europe is "going to change much more from a currency-oriented market to a credit-oriented market," said William T. Lloyd, director and head of market strategy and credit research for Barclays Capital. "Right now, buying U.S. governments or quasi-U.S. governments is a relatively safe way for Europeans to play the market."

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