Lehman Preferred Series "J" Preferred (fka LEHJQ)

[coach tequila]

KKR Financial Triples Income as Credit Demand Drives CLO Rally

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXp85oE4JnEM


Excerpt...
The lowest-rated pieces of CLOs, which pool high-yield, high-risk loans and slice them into securities of varying risk, have climbed to 30 cents to 40 cents on the dollar from less than 10 cents seven months ago, according to a Nov. 4 report from Morgan Stanley. Those ranked BBB have risen to 59 cents from 6 cents on the dollar in the past six months.

San Francisco-based KKR Financial has increased more than 12-fold to $5.18 as of yesterday, since reaching a low in March of 42 cents. Shares tumbled 89 percent in 2008.

‘Improved Market Conditions’

“During the past nine months, we have significantly improved our situation as a result of improved market conditions and some pro-active actions,” KKR Financial Chief Executive Officer William Sonneborn said yesterday during a conference call with investors.

CLOs, a form of collateralized debt obligation that invest in leveraged loans, were popular before the credit markets seized up in late 2007 because they offered investors higher yields than similarly rated securities. The $58 million AA ranked portion of KKR Financial CLO Ltd. sold in March 2005 paid interest at 45 basis points more than benchmark bank rates. That compared with a spread of as little as 36 basis points for companies of the same grade, according to Merrill Lynch & Co. indexes. A basis point is 0.01 percentage point