The unusually narrow gap between unsecured corporate and ABS spreads has Salomon Smith Barney researchers Peter DiMartino and Mary Kane noticing a unique profit-making play - exploiting the disproportionate correlation in spread movements for ABS versus corporate debt.

In a research piece entitled "Mind The Gap - Between Secured and Unsecured," Salomon notes the "little spread difference between the two markets," as well as a belief that these narrow differentials will soon reverse course. Because of this, the firm recommends the use of credit default swaps in lieu of shorting the unsecured debt in the cash market.

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