Not so long ago, private equity firms were scrambling to set up distressed credit funds. The thinking was that there were lots of beaten down securities out there that amounted to a once in a lifetime opportunity. It's probably fair to say that the enthusiasm has waned as of late. KKR Financial reported a $1.2 billion quarterly loss and nixed its dividend for the fourth quarter, and probably for 2009.

The publicly traded fund said the results figures reflected "higher loan losses, losses on sales of assets during the quarter, a writedown of corporate loans, losses on derivative transactions and a $454 million impairment charge," according to Reuters. About 85 percent of its assets are in leveraged loans, at a time when many portfolio companies are still ailing. There are other distressed credit funds that are likely in the same boat.

For more:
- here's the Reuters article

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