KKR Financial (NYSE:KFN) Will Ride Refinancing Wave

FBR Capital said they're maintaining their "Outperform" rating on KKR Financial (NYSE:KFN), citing their positioning in relationship to the refinancing trend.

FBR said, "We reiterate our rating and price target on KFN shares as we believe that the company's business model is uniquely positioned to take advantage of the continuous refinancing wave in below-investment-grade corporate credit. Year-to-date results have evidenced the structural advantages of the company's legacy CLO business model via increasing portfolio spread (50+ bps increase in 3Q), higher run-rate operating earnings ($0.43 in 3Q), higher run-rate cash earnings ($0.27 in 3Q), and higher dividends ($0.14 in 3Q). We expect this earnings power to continue, and to be augmented on a go-forward basis via the potential for a new CLO issuance in 2011 as well as strategic non-CLO investments."

KKR Financial closed Tuesday at $8.79, falling $0.02, or 0.23 percent. FBR has a price target of $12 on them.