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                          [Clifford Chance Letterhead]

June 20, 2006

Securities and Exchange Commission
Judiciary Plaza
100 F Street, NE
Washington, D.C.  20549
Attention:  Vincent Di Stefano, Division of Investment Management

RE:         PROSPECT ENERGY CORPORATION
            FILE NOS. 333-132575 AND 814-659

Dear Mr. Di Stefano:

                  Thank you for your comments dated April 28, 2006, and
additional comments provided orally on May 11, 2006, regarding the registration
statement on Form N-2 (the "Registration Statement") for Prospect Energy
Corporation (the "Fund") filed with the Securities and Exchange Commission (the
"Commission") on March 20, 2006. The Registration Statement relates to the shelf
offering of the Fund. Below, we describe the changes made to the Registration
Statement in response to the Staff's comments and provide any responses to or
any supplemental explanations of such comments, as requested.

         The Fund has considered the Staff's comments and has authorized us to
make on its behalf the responses and changes discussed below to the Registration
Statement. These changes are reflected in the attached changed pages to the
Registration Statement which will be included in a pre-effective amendment to
the Registration Statement, which will be filed via EDGAR once comments on the
Registration Statement are resolved.

COMMENTS TO PROSPECTUS
----------------------

COMMENTS TO COVER
-----------------

COMMENT 1.    PLEASE CLEARLY DISTINGUISH THE FUND, ITS SHAREHOLDERS AND
              INVESTMENT ADVISER THROUGHOUT THE DOCUMENT.

                     Response 1. We respectfully acknowledge this comment, but
                     defined terms for the Fund and the Investment Adviser are
                     currently set forth on the cover and page 1 of the
                     prospectus. Shareholders and potential investors are
                     identified as "you" or clearly identified as such.

COMMENT 2.    PLEASE CONFIRM THAT THE BOLDED TEXT ON THE FIRST PAGE OF THE
              PROSPECTUS IS LOCATED ON THE OUTSIDE FRONT COVER PAGE. ALSO,
              PLEASE UN-BOLD ALL BUT THE FIRST TWO SENTENCES OF THE TEXT
              CURRENTLY BOLDED.

                     Response 2. The applicable text has been unbolded
                     accordingly and we confirm that the bolded text appears on
                     the front cover of the prospectus.

COMMENT 3.    PLEASE INCLUDE THE PRICING TABLE REQUIRED BY ITEM 1.G. OF FORM N-2

                     Response 3. As currently disclosed on the cover of the
                     prospectus, material terms relating to the offering of the
                     subject securities, such as the pricing table required by
                     Item 1.g of Form N-2, will be included in the prospectus
                     supplement to be subsequently filed for each "take-down"
                     registration of securities.

COMMENT 4.    PLEASE DISCLOSE THAT AN INVESTMENT IN THE FUND PRESENTS A
              HEIGHTENED RISK OF TOTAL LOSS OF INVESTMENT AND MAKE PROMINENT THE
              DISCLOSURE THAT THE INVESTMENT FUNDS ARE SUBJECT TO SPECIAL RISKS.
              SEE ITEM 1.1.J. OF FORM N-2.

                     Response 4. The language has been clarified, and made
                     prominent, accordingly.

COMMENT 5.    PLEASE CONFIRM THAT ANY WARRANTS THE FUND MAY ISSUE MEET THE
              REQUIREMENTS OF SECTION 61(A)(3) (A) OF THE INVESTMENT COMPANY ACT
              OF 1940.

                     Response 5. Any warrants that the Fund may issue will meet
                     the requirements of Section 61(a)(3)(A) of the Investment
                     Company Act of 1940 (the "1940 Act").

COMMENT 6.    THE REGISTRATION STATEMENT PERTAINS TO A SHELF OFFERING, WHICH MAY
              BE COMMON STOCK, PREFERRED STOCK, WARRANTS OR DEBT SECURITIES, BUT
              DOES NOT DISCLOSE THE MATERIAL TERMS OF THESE SECURITIES. PLEASE
              REVISE THE DISCLOSURE TO INCLUDE THE MATERIAL TERMS OF THE SUBJECT
              SECURITIES. PLEASE EXPLAIN TO US HOW THE FUND IS ELIGIBLE TO MAKE
              A SHELF OFFERING PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
              1933.

                     Response 6. We respectfully acknowledge the comment, but
                     believe the current disclosure on the cover of the
                     prospectus, clearly states that a prospectus supplement
                     relating to any offering of the subject securities will
                     contain all the material terms of the subject securities.

                     As a business development company ("BDC"), the Fund is
                     required to register its securities on Form N-2 and is not
                     permitted to file a registration statement or any other
                     form. However, Rule 415(a)(1)(x) does not require the
                     subject securities to be registered on Form S-3; it is
                     sufficient that securities be "qualified" to be registered
                     on Form S-3. Accordingly, a BDC, such as the Fund, that
                     meets the requirements of Form S-3 is permitted to offer
                     and sell its securities pursuant to Rule 415(a)(1)(x) even
                     though it is required to register its securities on Form
                     N-2 and a number of BDCs have done so. Further, the Staff
                     of the Commission has permitted a closed-end investment
                     company to conduct a shelf offering on Form N-2 in
                     accordance with Rule 415(a)(1)(x) if such company's common
                     stock is "qualified to be registered" on Form S-3. See SEC
                     No-Action letter, Pilgrim America Prime Rate Trust
                     (available May 1, 1998).

                                       2

              The Fund confirms that its common stock is qualified to be
              registered on Form S-3.

COMMENTS TO SUMMARY
-------------------

COMMENT 7.    PLEASE SUMMARIZE THE RISKS OF INVESTING IN THE ENERGY SECTOR.

                     Response 7. The language has been added accordingly.

COMMENT 8.    DISCLOSURE IN THE SECTION TITLED "THE INVESTMENT ADVISER"
              INDICATES THE FUND WILL PAY THE ADVISER AN INVESTMENT MANAGEMENT
              FEE BASED ON GROSS ASSETS "(INCLUDING ANY AMOUNTS BORROWED)."
              PLEASE CLARIFY THAT AMOUNTS BORROWED TO PAY CURRENT LIABILITIES,
              RATHER THAN FOR LEVERAGE, WILL NOT BE INCLUDED IN THE CALCULATION
              OF THE INVESTMENT MANAGEMENT FEE.

                     Response 8. The language has been clarified accordingly.

COMMENTS TO FEES AND EXPENSES
-----------------------------

COMMENT 9.    SINCE THE FUND MAY BORROW DURING THE CURRENT FISCAL YEAR, PLEASE
              MOVE THE CURRENT ANNUAL EXPENSES INFORMATION FROM THE FEE TABLE TO
              FOOTNOTE (7), AND INSERT IN ITS PLACE THE ANNUAL EXPENSES
              INFORMATION NOW FOUND IN FOOTNOTE (7).

                     Response 9. The table has been modified accordingly.

COMMENT 10.   PLEASE DELETE FROM THE FIRST SENTENCE OF FOOTNOTE (8) THE TERM
              "FUTURE ANNUAL EXPENSES" AND INSERT IN ITS PLACE "EXPENSES DURING
              CURRENT FISCAL YEAR."

                     Response 10. The language has been changed accordingly.

COMMENT 11.   THE LAST SENTENCE OF FOOTNOTE (9) STATES THAT IN THE EVENT THE
              TOTAL ANNUAL EXPENSE PERCENTAGE WAS CALCULATED AS A PERCENT OF
              TOTAL ASSETS, TOTAL ANNUAL EXPENSES WOULD BE 5.25% OF NET ASSETS.
              THIS DOES NOT MAKE SENSE. PLEASE CLARIFY.

                     Response 11. The language has been changed to reflect
                     "total annual expenses would be 7.06% of total assets."

COMMENT 12.   PLEASE REMOVE THE FOOTNOTES FROM BETWEEN THE FEE TABLE AND EXAMPLE
              AND INSERT THEM IMMEDIATELY AFTER THE EXAMPLE.

                     Response 12. We respectfully acknowledge the comment, but
                     believe the current placement of the footnote is
                     appropriate. We believe that to move the

                                       3

                     footnotes to below the Example would diminish the impact of
                     the information and would make it more difficult for a
                     shareholder to locate the footnotes.

COMMENT 13.   THE PROSPECTUS IN NARRATIVE TEXT DISCLOSES THAT THE CAPITAL GAIN
              INCENTIVE FEE IS CALCULATED BY TAKING THE NET PROCEEDS FROM THE
              SALE OF AN ASSET MINUS THE PURCHASE PRICE. THE EXAMPLES OF HOW THE
              INCENTIVE FEE IS DETERMINED, HOWEVER, DEDUCT FROM THE SALES PRICE
              THE MOST RECENT FAIR MARKET VALUATION (NOT THE PURCHASE PRICE).
              PLEASE RECONCILE THE DISCLOSURE.

                     Response 13. The disclosure in the examples has been
                     revised to make it clear that, when a security is sold for
                     a gain in a circumstance in which the Fund experiences an
                     unrealized loss on that security in a fiscal year prior to
                     the fiscal year of the sale, the base upon which the
                     incentive fee is calculated is increased by two elements:
                     first, the amount of the gain realized on that sale (i.e.,
                     the difference between the purchase price and the sale
                     price of the security), and second, the amount, if any, of
                     the unrealized loss incurred on the security in a prior
                     fiscal year but only to the extent that that unrealized
                     loss was used to offset realized gains in that prior fiscal
                     year in computing the incentive fee. We believe that this
                     change to the disclosure in the examples will provide a
                     better understanding of the elements that go into the
                     incentive fee calculation, consistent with the narrative
                     disclosure regarding the incentive fee calculation that
                     indicates that the incentive fee is based on the aggregate
                     realized gains, less the aggregate realized losses and less
                     the aggregate unrealized losses of the Fund.

COMMENT 14.   PLEASE DISCLOSE THAT THE DETERMINATION OF FAIR VALUE, AND THUS THE
              AMOUNT OF UNREALIZED LOSSES THE FUND MAY INCUR IN ANY YEAR, IS TO
              A DEGREE SUBJECTIVE, AND THE ADVISOR HAS A CONFLICT OF INTEREST IN
              MAKING THE DETERMINATION. SPECIFICALLY, THE AMOUNT OF THE
              ADVISOR'S COMPENSATION UNDER THE INCENTIVE FEE IS DUE, IN PART, TO
              THE AMOUNT OF UNREALIZED DEPRECIATION ACCRUED BY THE FUND. PLEASE
              ADVISE THE STAFF WHETHER THE BOARD WILL ACTIVELY MONITOR THIS
              CONFLICT OF INTEREST AND THE OPERATION OF THE PERFORMANCE FEE.

                     Response 14. The disclosure has been added accordingly in
                     the sections "Risk Factors -- Potential conflicts of
                     interest could impact our investment returns" and "Most of
                     our portfolio investments are recorded at fair value as
                     determined in good faith by our Board of Directors and, as
                     a result, there is uncertainty as to the value of our
                     portfolio investment." The Fund's board of directors
                     monitors this conflict of interest by valuing the
                     securities quarterly and relies on input from a third party
                     valuation firm and the audit committee, as well as the
                     adviser. In addition, the board monitors the calculation of
                     the incentive fee quarterly. See also, Response 17.

                                       4

COMMENT 15.   PLEASE NOTE THAT THE STAFF ANTICIPATES PROVIDING ADDITIONAL
              COMMENTS PERTAINING TO THE FUND'S FINANCIAL STATEMENTS UNDER
              SEPARATE COVER. THE FOLLOWING COMMENTS WERE PROVIDED ORALLY BY MR.
              DESTEFANO ON BEHALF OF THE ACCOUNTING DIVISION:

COMMENT 15A.  REGARDING FOOTNOTE (5) OF THE FEE TABLE, PLEASE CLARIFY HOW THE
              BASE MANAGEMENT FEE THAT IS BASED ON "GROSS" ASSETS, IS IDENTIFIED
              ON THE FEE TABLE AS A CALCULATION OF "NET" ASSETS.

                     Response 15a. Footnote (5) has been revised to reflect that
                     the base management fee is based on gross assets, which
                     includes any amount borrowed, i.e., total assets without
                     deduction for any liabilities.

COMMENT 15B.  REGARDING FOOTNOTE (5) OF THE FEE TABLE, PLEASE DELETE THE LAST
              TWO SENTENCES AND MOVE THEM TO THE TEXT OF THE PROSPECTUS, WHERE
              APPLICABLE, AS WE BELIEVE IT IS MISLEADING AS IT SEEMS UNLIKELY AT
              THE PRESENT TIME THAT THE FUND WILL REACH THE REQUISITE THRESHOLD.

                     Response 15b. The disclosure has been deleted accordingly
                     and is already described in the section "Investment
                     Advisory Agreement."

COMMENT 15C.  REGARDING FOOTNOTE (6) OF THE FEE TABLE, IN LIGHT OF THE STATEMENT
              "IN JANUARY 2006, WE PAID AN INCENTIVE FEE OF $507,864," PLEASE
              REFLECT PAYMENT OF SUCH INCENTIVE FEE IN THE FEE TABLE (IT
              CURRENTLY STATES 0.00%).

                     Response 15c. The disclosure has been revised accordingly.

COMMENT 15D.  REGARDING FOOTNOTE (6) OF THE FEE TABLE, PLEASE CLARIFY THE
              MEANING OF THE FIFTH SENTENCE. IS THE VOLUNTARY AGREEMENT A
              WAIVER? PLEASE CONFIRM THAT THE INCENTIVE FEE DISCLOSED IN THE FEE
              TABLE IS "GROSS" OF ANY WAIVERS.

                     Response 15d. The voluntary agreement referred to in
                     footnote (6) is not a fee waiver but rather, as described,
                     a different hurdle rate which may be greater or lesser than
                     the 1.75% rate depending on prevailing interest rates from
                     time to time. We confirm that the incentive fee set forth
                     in the body of the fee table is not net of any fee waivers.

COMMENTS 15E. REGARDING FOOTNOTE (6) OF THE FEE TABLE, PLEASE PRESENT THE
              EXAMPLES OF HOW THE INCENTIVE FEE IS CALCULATED, USING ACTUAL
              NUMBERS.

                     Response 15e. The disclosure has been revised accordingly.

COMMENTS 15F. REGARDING THE FEE TABLE GENERALLY, THE FINANCIAL HIGHLIGHTS SHOW
              EXPENSES OF 6.95%, PLEASE EXPLAIN HOW TOTAL ANNUAL EXPENSES
              (ESTIMATED) IN THE FEE TABLE ARE ONLY 3.47%.

                                       5

                     Response 15f. The revised fee table shows expenses of
                     9.18%; greater than the 6.96% expense ratio shown in the
                     financial highlights for the nine months ended March 31,
                     2006 primarily due to the inclusion of interest expense in
                     the fee table. The expense ratio in the financial
                     highlights does not reflect interest expense as the Fund
                     had not borrowed any amount as of March 31, 2006.

COMMENTS 15G. REGARDING FOOTNOTE (7) OF THE FEE TABLE, IF THERE IS AN INTENT TO
              INCUR INDEBTEDNESS, YOU MUST DISCLOSE INTEREST PAYMENTS ON
              BORROWED FUNDS AS AN ANNUAL EXPENSE IN THE FEE TABLE (CURRENTLY
              STATES 0.00%).

                     Response 15g. The revised fee table discloses interest
                     payments. The table in fo