Full Description

KKR Financial Holdings LLC, together with its subsidiaries is a specialty finance company. The Company invests in financial assets primarily consisting of corporate loans and securities, including senior secured and unsecured loans, mezzanine loans, high yield corporate bonds, distressed and stressed debt securities, marketable and non-marketable equity securities, and credit default and total rate of return swaps. The Company's corporate debt investments are held in collateralized loan obligation (CLO) transactions that the Company uses as long term financing for these investments.

The Company’s income is generated primarily from net interest income and dividend income, realized and unrealized gains and losses on its derivatives that are not accounted for as hedges, realized gains and losses from the sales of investments, and realized and unrealized gains and losses on securities sold, not purchased. The Company’s corporate investment portfolio primarily consists of investments in corporate loans and debt securities. Its corporate loans primarily consist of senior secured, second lien and mezzanine loans. Its corporate loan portfolio totaled approximately $8.1 billion as of December 31, 2008. As of December 31, 2008, 98.6% of its corporate loan portfolio was floating rate and 1.4%, was fixed rate. Its residential mortgage investment portfolio consists of investments in RMBS with an estimated fair value of $270.7 million as of December 31, 2008.