The squeeze on margins in the credit enhancement side of asset securitization was beginning to make the business unprofitable, but creative bankers have come up with a way to continue offering credit enhancement to their clients.

"Spreads in this business have gone from the 90 to 100 basis points that were available three years ago to the 45 to 55 basis point range now," said Charles Hindmarsh, a managing director at State Street Capital Corp. As a result, he said, the business had become "less attractive" for his company.

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