Concurrent to the talk of replacing U.S. Treasurys as a benchmark for asset-backed securities, ABS investors and dealers are increasingly using swaps to hedge their positions, said market sources.

"When you change your benchmark, you almost by definition change your hedge," said Louis Nees, managing director on the swap desk at Bear Stearns & Co. "We're getting an increasing number of phone calls from either investors or originators, who are more and more interested in using swaps to hedge their businesses."

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