SecProbe.io

November 4, 2019
VIA EDGAR
United States Securities  and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, DC 20549
Attn: Lisa N. Larkin
Re: Morgan Stanley Direct Lending Fund LLC
Registration Statement on Form 10
File Number: 000-56098
Ladies and Gentlemen:
On behalf of the Morgan Stanley Direct Lending Fund LLC, a Delaware limited liability company (the “Company ”), we hereby
respond to the comments rais ed by the staff (the “Staff ”) of the U.S. Securities and Exchange Commission (the “Commission ”)  in a
letter dated October 23, 2019 from Lisa N. Larkin of the Staff to  Matthew J. Carter of Dechert LLP, outside counsel to the Comp any,
regarding the Company’s Registration Statement on Form 10 (Registration No. 000-56098) filed on September 26, 2019 (the
“Registration Statement ”). For your convenience, the Staff’ s comments are included in this lett er, and each comment is followed by
the applicable response. When reference is made to revisions that will be made in a subsequent amendment to the Registration
Statement, such revisi ons will be reflected in amendm ent number 1 to the Registration Statement (“Amendment No. 1 ”), which the
Company anticipates filing in mid-November upon finalizing its fi nancial statements as of and for the period ended September 30 ,
2019. Upon the filing of Amendment No. 1, we will also provide co urtesy copies of Amendment No. 1, as filed and marked with the
changes from the initial filing of the Registration Statement. Ex cept as provided in this letter, terms used in this letter hav e the
meanings given to them in the Registration Statement.
Page 1 —Explanatory Note
1. Please add the following:
a. The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. As
a result, the Company is eligible to take advantage of  certain reduced disclosure and other requirements that are
otherwise applicable to public  companies including, but not limited to, no t being subject to the auditor attestation
requirements of Section 404(b) of the Sa rbanes-Oxley Act of 2002.  See “Item 1A. Risk Factors — Risks Related to
Our Business and Structu re — We are an “emerging growth company,” and we  do not know if such status will make
our shares less attractive to investors.”
1900 K Street, NW
Washington, DC 2000 6
Boston, MA 0211 0-2605
+1 202 26 1-3300 Main
+1 202 261 3333 Fa x
www.dechert.co m
MATTHEW J. CARTE R
matthew.carter@dechert.co m
+1 202 261 3395 Direc t
+1 202 261 3184 Fa x

b. The Commission maintains an Internet  Website (http://www .sec.gov) that contains the reports mentioned in this
section.
Response:
As requested, the Company will revise the disclosure in Amendment No. 1 to add the requested language.
Page 2 —Item 1. Business
2. You state, “Prior to the Eff ective Date and prior to our election to be regul ated as a BDC, we will  complete a conversion
under which Morgan Stanley Direct Lend ing Fund will succeed to the business of Morgan Stanley Direct Lending Fund
LLC, and the member of Morgan Stanley Direct Lending Fund LLC will become  the stockholder of  Morgan Stanley
Direct Lending Fund.” Please tell us whether this  conversion is a routine or non-routine matter.
Response:The Company respectfully submits th at the BDC Conversion will be un dertaken to comply with certain requirements in order to
qualify as a regulated investment company (“RIC”) under Subchapt er M of the Internal Revenue Code of 1986, as amended (the
“Code”), for its first taxable year as a bu siness development company. The Company resp ectfully submits that it believes that the
BDC Conversion is a standard a pproach for a business development company seeking to qualify as a RIC for each day of its tax ye ar
as a corporation.
3. The first paragraph of this section st ates that the Company intends to invest  in senior secured or unsecured loans,
subordinated loans and mezzanine loans. We  are aware that rating agencies as well as the financial media have recently
reported that traditional lender protections are being eroded and that so-called “covenant-lite loans” are increasingly
common. See, e.g., “Lev eraged Loans Not as Safe as They Once Were,” W all Street Journal (Augus t 16, 2018). If the
Company intends to invest in covenant- lite loans, please describe such loans and the extent to which the Company may
invest in such loans; also, consider enhancing the disclosure of the risks of such loans.
Response:
The Company respectfully submits that it intends to invest primar ily in directly originated seni or secured term loans issued by  U.S.
middle market companies backed by financial sponsors. As disclose d in the Registration Statement, the Company believes that mid dle
market loans tend to
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garner more meaningful financial covenants and typically contain carefully structured covenant p ackages that allow lenders to t ake
early action in situations where obligors un derperform. In addition, the Company resp ectfully submits that, as stated in the
Registration Statement, one of the key themes of its investment strategy is “[s]tructuring investments focused on providing [th e
Company] with security, covenant protection and current income while ensuring [its] borrowers have adequate liquidity to operat e.”
The Company respectfully submits that any so-called “covenant-lite loans” that the Company acquires would not be expected to
comprise a material percentage of the Comp any’s investments and that additional risk  disclosure regarding “covenant-lite loans”
would be potentially confusing to investors as it would overstate the si gnificance of such risks.
4. Please disclose in this section the expected credit quality and matu rity of the Company’s invest ments. Please include the
term “junk bonds” in descri bing debt instruments that will  be rated below investment grad e or which, if unrated, would
be rated below investment grade if they were rated.
Response:
As requested, the Company will revise the disclosure in this s ection in Amendmen t No. 1 to disclose the expected credit quality  and
maturity of the Company’s investments.  The Company will also include th e term “junk bonds” where appropriate.
Page 5 —Competitive Advantages
5. In footnote 1, you refer to an exemptive order regarding co -investments with certain accoun ts managed by the Company’s
adviser and its affiliates. Please advise us of the status of the exemptive application. If the application is pending, revise the
disclosure throughout the registration st atement to clarify that such relief has not yet been granted and may not be
granted.
Response:
The Company respectfully submits that the Company’s application for exemptive relief to enga ge in certain co-investment
transactions (File No. 812-15057) was submitted on August 9, 2019 and is currently pending.  As requested, the Company will rev ise
the disclosure in Amendment No. 1 to clarify that the Company’s application for exemptive relief has not yet been granted and m ay
not be granted.Page 8
—Large and Growing U.S. Middle Mark et with Favorable Market Trends
6. In plain English, please describe Refinitiv LPC and Prequin,  Ltd. and explain what relevan ce they have to this section.
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Response:
As requested, the Company will add a description of Refinitiv LPC and Prequin, Ltd. in plain English in Amendment No. 1 and
explain the relevance such entities have to this section.Page 16
—Examples of Quarterly In centive Fee Calculation
7. You state, “For the purpose of computing the incentive fee on capital gains, the calculation methodology will look through
derivative financial instruments or sw aps as if we owned the reference assets directly.” Based on the disclosure in the
registration statement, it is unclear what kind of derivatives the Company will use an d, specifically, whether the Company
will engage in total return swaps.
a. Please add disclosure clarifying the Company’s use of derivatives. If the Comp any will engage in total return swaps,
please tell us whether the Company’s investment advisory agreemen t addresses the treatment of total return swaps
for purposes of the base  management fee and the in centive fee calculations.
b. Please tell us whether the Company w ill look through the swap and count th e reference assets as investments of the
Company for purposes of comput ing the incentive fee on income.
c. Please tell us whether, for purposes of the asset coverage ratio test of s ection 61(a) under the Investment Company
Act, the Company will treat th e notional amount of the swap, reduced by the amount of ca sh collateral required to be
posted by the Company, as a senior security for the life of the swap.
d. Please tell us whether, for purposes  of section 55(a) under the Investment Co mpany Act, the Comp any will treat each
loan underlying the swap as a qualifying asset only if the obligor on the loan is an eligible portfolio company and as a
non-qualifying asset if the obligor is  not an eligible portfolio company.
Response:
The Company respectfully submits that it doe s not have a current intention to enter into any derivative financial instruments o r swaps
and that additional disclosure in the Registration Statement would not be useful to investors.While the Company respectfully submits that it currently does not in tend to enter in to a total return swap, if the Company wer e to
enter in to a total return swap, it would be expected that the terms of the total return swap would provide for the Company to receive
all interest and fees payable in respect of the reference assets , which payments would appropriat ely be treated as interest inc ome for
purposes of calculating the income incentive fee payable under the Investment Adviso ry Agreement, consistent with the explicit terms
thereof. Upon the termination of a reference asset in
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the portfolio underlying a total return swap, the amount paid to the Company in respect of any ap preciation of such reference asset
would be treated as capital gains for purpose s of calculating the capital gain incentiv e fee under the Investment Advisory Agre ement.
In addition, the fair value of the total return swap would be included with the investments of the Company on its balance sheet  and, as
a result, would be included in the determination of the gross a ssets of the Company for purposes of calculating the base manage ment
fee pursuant to the Invest ment Advisory Agreement.
The Company respectfully submits that it is  aware of the Staff’s positio n regarding the treatment of a total return swap for pu rposes of
(i) the asset coverage requiremen ts of Section 18 of the Investment Company Act of 1940, as amended (t he “Investment Company
Act”), which will be applicable to it as a business development company under Section 61 of the Investment Company Act, and
(ii) determination of qualifying assets for purposes of Section 55(a) of the Investment Company Act. If the Company were to ent er
into a total return swap, the Company expects that it would treat  the outstanding notional amount of the total return swap, les s the
amount of any cash collateral or other liquid assets posted or segregated by it under the total return swap, as a senior securi ty for the
life of that instrument and would treat the assets underlying a to tal return swap as assets of the Company for such regulatory purposes.
The Company respectfully reserves  its right in the future to treat any total return swap for regulatory purposes in accordance with any
then current Staff or Commission rule, guidance or interpretation regarding the regulatory treatment of total return swaps or s imilar
derivative instruments that differs from such proposed treatment.
8. Please add, adjacent to this section, a fee table that conforms to requirements of Item 3 of Form N-2. Such disclosure will
be helpful to investors.
Response:
The Company respectfully submits that it is not aware of any affirmative requirement to include a fee table that conforms to th e
requirements of Item 3 of Form N-2 in a registration statement on Form 10.  The Comp any believes that such disclosure was omitt ed
from Form 10 for good reason, in that such disclosure would be inappropriate and potentially misleading to a Company that is not
undertaking a public securities offering and remains at an early stage of development.  The Company respectfully submits that t he
disclosure requirements of Item 3 of Form N-2 are intended to a pply to a prospectus that is or will be used in connection with an
offering of securities by a registrant; the Registration Statement is  not a prospectus and is not part of the materials on whic h any
investor would rely in connection with a decision to invest in the Company’s securities.  Consequently, any information include d in
the Registration Statements and tending to sugg est such an offering of securities coul d be construed as a general solicitation that
would impede or void the Company’ s contemplated private placement of common stock.   The Company further submits that the fees
and expenses to be borne by stockholders through the investment  advisory agreement and other c ontractual arrangements are fully
described in several places throughout the Registration Statement and would not, in an y case, include disclosure related to sal es load
or offering expenses as required by Item 3 of Form N- 2, which are not applicable to the Company at this time.
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With respect to disclosure related to possible financing facilit ies called for by Item 3 of Form N-2, the Company respectfully submits
that it has not yet negotiated such a facility and that any such fee table disclosure would be speculative at this time, as wou ld
disclosure regarding the amount of capital that the Company may be raise and i nvest during its first year of operations. Furthe rmore,
the Company respectfully submits that any public disclosure regarding the cost of leverage it may incur could negatively impact  its
negotiations with prospective third parties lenders.
Finally, the Company respectfully submits that fees and expenses actually incurred by th e Company, and indir ectly incurred by t he
stockholders of the Company, will be disclosed in the Company’s quarterly reports on Form 10-Q and its annual report on Form 10 -K
and that this ongoing reporting information would be of greater utility to investors than the requested table.
9. Please add an example that conforms to  the requirements of Instruction 11 to Item 3.1 of Form N-2. We further request
that you include, in the explanatory pa ragraph following the example, a second example where the five percent return
results entirely from net realized capital gains and which uses  language substantially the same as the following: “You
would pay the following expenses on a $1,000 investment, a ssuming a 5.0% annual return resulting entirely from net
realized capital gains (all of which is subject to our incentive fee on capital gains): $    $     $     $    .” Such disclosure  will be
helpful to investors.
Response:
The Company respectfully submits that it is not aware of any affirmative requirement to include an ex ample that conforms to the
requirements of Instruction 11 to Item 3.1 of Form N-2 in the Registration Statement. For the r easons described above in respon se to
comment 8, the Company respectfully submits that it would not be  appropriate to include the reque sted example in the Registrati on
Statement.
Page 19 —Administration Agreement
10. Please disclose how the board of directors, including the independent directors, will review  the compensation that the
Company pays to the administrator and de termine that such payments are reasonabl e in light of the services provided.
Response:
As requested, the Company will revise the disclosure in Amendment No. 1 to discuss how the board of directors will review amoun ts
reimbursed to the Administrator pursuant to the Administration Agreement and how the board of di rectors will determine that s