SecProbe.io

1Rupert, Kevin C.
From: Meyer, Colleen B. <Colleen.Meyer@ropesgray.com>
Sent: Wednesday, October 24, 2012 2:09 PM
To: Sandoe, Christian T.; Minore, Dominic
Cc: Rupert, Kevin C.; Rahn, Elizabeth; McCabe, Brian D.
Subject: RE: BABSON CAPITAL GLOBAL SHORT DURA TION HIGH YIELD FUND -- Investment
Management Agreement
Attachments: Change-Pro Redline - 32080267-v13-Babson_Capital_SEC_Staff_Comment_R esponse_Letter_October_2012 and 32080267-
v14-Babson_Capital_SEC_Staff_Comment _Resp.doc; Change-Pro Redline - 31970563-
v7-BGH BCM Form of Investment Management Agreement and 31970563-v8-BGH BCM Form of Investment Management Agreement.docx; 32080267-v14-Babson_Capital_SEC_Staff_Comment_Respo nse_Letter_October_2012.doc; Active_
31970563_8_BGH BCM Form of Investment Management Agreement.docx
All,

Apologies  for the multiple emails, but we made a few corrections  (mostly nits in the IMA and conforming  language for
the SEC comment  response letter), and I have attached clean and redline versions of the documents,  the redlines
marked against the versions sent earlier today.  As you know, we are pressed for time, and please let us know what we
can do to help cross the finish line.

Thank you,
 Colleen

Colleen Bathen Meyer
ROPES & GRAY LLP
T +1 415 315 6366 | F +1 415 315 4819
Three Embarcadero Center
San Francisco, CA 94111-4006
Colleen.Meyer@ropesgray.com
www.ropesgray.com
Circular 230 Disclosure (R&G): To ensure compliance with Tr easury Department regulations, we inform you that any U.S.
tax advice contained in this communication (including any attachments) was not intended or written to be used, and
cannot be used, for the purpose of avoi ding U.S. tax-related penalties or promoting, marketing or recommending to
another party any tax-related matters addressed herein.

This message (including attachments) is privileged and confi dential. If you are not the intended recipient, please delete it
without further distribution and reply to the sende r that you have received the message in error.

From:  Meyer, Colleen B.
Sent:  Wednesday, October 24, 2012 7:00 AM
To: 'sandoeC@sec.gov' ( sandoeC@sec.gov ); minored@sec.gov ; 'curtisj@sec.gov'
Cc: Rupert, Kevin C. ( RupertK@SEC.GOV ); Rahn, Elizabeth; McCabe, Brian D.
Subject:  RE: BABSON CAPITAL GLOBAL SHORT DURATION HIGH  YIELD FUND -- Investment Management Agreement

Christian,  Dominic, and Jim,

I have attached updated versions of the investment  management  agreement  and comment  response letter, clean and
marked against the versions that were emailed to you last week, for the Babson Capital Short Duration High Yield

2Fund.  Brian is currently in a board meeting, but he would be happy to discuss if you could email him your phone
numbers when you are available.   Thank you for your attention  to this matter.

Best,
 Colleen

From:  McCabe, Brian D.
Sent:  Friday, October 19, 2012 2:44 PM
To: 'sandoeC@sec.gov' ( sandoeC@sec.gov )
Cc: Rupert, Kevin C. ( RupertK@SEC.GOV ); Meyer, Colleen B.; Rahn, Elizabeth
Subject:  BABSON CAPITAL GLOBAL SHORT DURATION HIGH YI ELD FUND -- Investment Management Agreement

Christian – I have attached,  as we discussed,  a copy of the revised investment  management  agreement  for Babson
Capital Global Short Duration High Yield Fund, marked to highlight the text we’ve been discussing,  including a provision
that Babson Capital will treat the notional amount of total return swap contracts  entered into by the Fund as a
borrowing  of money for purposes of the Fund’s fundamental  investment  restriction  on the borrowing  of money or
issuance of senior securities  if the Manager has designated  such total return swap contracts  on the books and records of
the Fund as having been entered into for leverage purposes.

Please don’t hesitate to contact me if you have any further questions.   Have a great weekend,  and I look forward to
speaking with you on Monday.  – Brian

Brian D. McCabe
ROPES & GRAY LLP
T +1 617 951 7801 | F +1 617 235 0425
Prudential Tower, 800 Boylston Street
Boston, MA 02199-3600
brian.mccabe@ropesgray.com
www.ropesgray.com

ROPES & GRAY LLP
PRUDENTIAL TOWER 800 BOYLSTON STREET
BOSTON, MA  02199-3600
WWW.ROPESGRAY.COM

32080267_13 Error! Unknown document property name.

October 24, 2012 Mr. Dominic J. Minore and Mr. Kevin C. Rupert
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-4720
Re: Babson Capital Global Short Duration High Yield Fund (the “Fund”)
 File Nos. 333-174430; 811-22562
Dear Messrs. Minore and Rupert:
We are writing to respond to the comments of the staff (the “Staff”) of the Securities and
Exchange Commission (the “SEC”) that you and other members of the Staff provided to me
telephonically on October 17, 2012  and Oct ober 23, 2012 in connection with the Fund’s
registration statement on Form N-2/A (the “Reg istration Statement”) filed with the SEC on
September 24, 2012.  The Staff’s comments are su mmarized below, and each is followed by our
response.1
1. Comment.  Please confirm that the Fund will not include within “Managed Assets” the
notional amount of any deriva tives other than total retu rn swap contracts.
 Response .  The Fund will not include within “Man aged Assets” the notional amount of
any derivatives other than  total return swap contracts.  Any other derivatives entered into by the
Fund will be included in Managed Asset based so lely on their market value (or “in-the-money
amount”).
2. Comment.  We note that the Fund’s prospectus  disclosure under the heading
“LEVERAGE” states that “For this purpose, the Fund’s leverage thr ough derivatives will be
calculated using the net notional amount of the Fund’s derivatives  positions (and will exclude
derivatives used for hedging purposes, including in connection with foreign currency hedging
transactions).”  Please confirm that language will be added to the Investment Management
Agreement between the Fund and the Manager speci fying that the Manager will designate any
total return swap contracts entered into for le verage purposes as ente red into for leverage
purposes on the books and records of the Fund and will treat the notional amount of such total
return swap contracts entered into by the Fund as a borrowing of money for purposes of the
Fund’s fundamental investment restriction on th e borrowing of money or issuance of senior

1 Capitalized terms not defined herein shall have the same meaning ascribed to them in the prospectus or the
statement of additional information, as applicable, in the Registration Statement.

32080267_13 Error! Unknown document property name.  securities.  Please also confirm th at the Board of Trustees of the Fund will review the use of total
return swap contracts entered in to for leverage purposes and the Manager’s designation of any
total return swap contracts that have been entered into for levera ge purposes as a part of its
annual review under Section 15(c) of the Inve stment Company Act of 1940, as amended (the
“15(c) process”).

 Response .  The Fund hereby confirms that the following language will be in the
Investment Management Agreement:

“Managed Assets” are the total assets  of the Fund (including any assets
attributable to leverage ) such as assets attribut able to reverse repurchase
agreements, bank loans and preferred sh ares that may be outstanding and the
notional amount of total return swap cont racts entered into by the Fund, provided
that the Adviser such total return swap contracts are entered into for leverage
purposes and the Manager has designated such total re turn swap contracts on the
books and records of the Fund as having been  entered into for leverage purposes
(for this purpose, total return swaps on a single issuer shall be calculated on a net
basis) , but excluding the mark-to-market va lue of such total return swap
contracts ), minus the sum of the Fund’s accrued  liabilities (other than liabilities
incurred for the purpose of leverage or liabilities related to the liquidation
preference of any preferred shares issu ed).  The Manager and the Fund hereby
agree that the Manager will designate any to tal return swap contracts entered into
for leverage purposes as entered into  for leverage purposes on the books and
records of the Fund and will treat the noti onal amount of such total return swap
contracts entered into by the Fund as a borrowing of money for purposes of the
Fund’s fundamental investment restricti on on the borrowing of money or issuance
of senior securities.

We have also added language following the funda mental investment restriction on the borrowing
of money or issuance of senior  securities: “Note: Pursuant to the Investment Management
Agreement, the Manager will treat  the notional amount of total retu rn swap contracts entered into
by the Fund as a borrowing of money if the Mana ger has designated such total return swap
contracts on the books and records of the Fund as having been entere d into for leverage
purposes.”
In connection with the annual S ection 15(c) process, the Board of Trustees of the Fund will
review the use of leverage, incl uding the use of total return swap contracts entered into for
leverage purposes, and the Manager’ s designation of such total retu rn swap contracts as having
been entered into for leverage purposes on the books and records of the Fund.
* * * * *

32080267_13 Error! Unknown document property name.  We hope that the foregoing adequately addr esses the Staff’s comments.  As discussed,
the Fund expects to request that effectiveness of the Registration Statement be acce lerated to the
morning of October 25, 2012.  Accordingly, we woul d prefer to resolve any issues as soon as
possible.  If you have any questions, please feel free to call me at 617.951.7801 or Colleen
Meyer at 415.315.6366.
Very truly yours,
   Brian D. McCabe
cc: Christian Sandoe
Christopher DeFrancis Janice M. Bishop Colleen B. Meyer
 Elizabeth A. Rahn

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31970563_7 Error! Unknown document property name.  INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT, dated as of October __, 2012
(the “ Agreement ”), by and between BABSON CAPITAL GLOBAL SHORT DURATION
HIGH YIELD FUND, a Massachusetts business trust (the “ Fund ”) and BABSON CAPITAL
MANAGEMENT LLC (the “ Manager ”), a Delaware limited liability corporation.
  SECTION 1 .  Appointment and Duties of Manager . (a) Subject to the terms and
conditions set forth herein, the Fund hereby appo ints the Manager, subject to the review and
supervision of the Board of Trustees of the Fund (the “ Board ”), to act as the investment adviser
for and to manage the investment and reinvestment of the assets of the Fund in accordance with the Fund’s investment objectives and policies a nd limitations, and to manage the day-to-day
business and affairs of the Fund (except with respect to matters in the charge of the Fund’s chief
compliance officer or other service providers retained by the Fund), for the period and on the
terms set forth in this Agreement. The investment of funds shall be subject to all restrictions of
applicable law and the Amended and Restated Decl aration of Trust and By-Laws of the Fund, and
resolutions of the Board as may from time to tim e be in force and delivered in writing to the
Manager.

(b)  The Manager accepts such appointment a nd agrees during the term of this Agreement
to:
(i)  supervise the investment activities of the Fund, including advising and consulting
with the Board as the Board may reasonably request;

(ii)  continuously manage the assets of the Fund in a manner consistent with the
investment objectives and policies of the Fund;

(iii)  determine the securities to be purchased , sold or otherwise disposed of by the
Fund and the timing of such purchases, sales and dispositions, including the placing of
purchase and sale orders on behalf of the Fund, as necessary or appropriate;

(iv)  furnish offices, facilities and equipmen t to the Fund to the extent necessary for
the management of the Fund; and

(v)  render periodic reports to the Board as the Board may reasonably request
regarding the Fund’s investment program  and the services provided by the Manager
hereunder.

(c)  The Manager may delegate any of the fore going responsibilities to a third party sub-
adviser with the consent of the Fund’s Board of Trustees.

(d)  The Fund acknowledges that the Manager makes no warranty that any investments
made by the Manager hereunder will not depreciate in value or at any time not be affected by
adverse tax consequences, nor does it give any wa rranty as to the performance or profitability of
the assets or the success of any investment strategy recommended or used by the Manager.

(e)  The Manager is authorized on behalf of the Fund to establish brokerage, bank and
other accounts and agreements.

2
31970563_7 Error! Unknown document property name.  SECTION 2 .  Transactions with Affiliates . The Manager is authorized on behalf of the
Fund, from time to time when deemed to be in the best interests of the Fund and to the extent
permitted by applicable law, to purchase and/or  sell securities and other instruments which the
Manager or any of its affiliates underwrites, deal s in, makes a market in and/or for the issuer
thereof performs or seeks to perform investme nt banking or other services. The Manager is
further authorized, to the extent permitted by ap plicable law, to select brokers (including any
brokers affiliated with the Manager) fo r the execution of trades for the Fund.
  SECTION 3.  Best Execution; Research Services . The Manager is authorized, for the
purchase and sale of the Fund’s portfolio securities an d other instruments, to employ such dealers
and brokers as may, in the judgment of the Manage r, implement the policy of the Fund to obtain
the best execution, taking into account such fact ors as price, including dealer spread, the size,
type and difficulty of the transaction involved , the firm’s general execution and operational
facilities and the firm’s risk in positioning the secur ities involved. Consistent with this policy, the
Manager is authorized to direct the execution of  the Fund’s portfolio transactions to dealers and
brokers furnishing statistical information or r esearch deemed by the Manager to be useful or
valuable to the performance of its investment  management functions for the Fund. It is
understood that in these circumstances, as cont emplated by Section 28(e) of the Securities
Exchange Act of 1934, as amended, the commissi ons paid may be higher than those which the
Fund might otherwise have paid to another broker if those services had not been provided.
Information so received will be in addition to and not in lieu of the services required to be
performed by the Manager. It is  understood that the expenses of the Manager will not necessarily
be reduced as a result of the receipt of such information or research. Research services furnished
to the Manager by brokers who effect transactions  for the Fund may be used by the Manager in
servicing other investment companies, funds and accounts which it manages. Similarly, research
services furnished to the Manager by brokers w ho effect transactions for other investment
companies, funds and accounts which the Manage r manages may be used by the Manager in
servicing the Fund. It is understood that not all of these research services are used by the Manager
in managing any particular account, including the Fund.
The Manager and its affiliates may aggregate purchase or sale orders for the Fund with
purchase or sale orders for the same instrument fo r the accounts of other clients