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 Document [Letterhead of Simpson, Thacher & Bartlett LLP] May 9, 2025 Via EDGAR Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Attn: Ken Ellington Re:    Prospect Capital Corporation Annual Report on Form 10-K (File No. 814-00659) Dear Mr. Ellington: On behalf of Prospect Capital Corporation (the “ Company ”), we transmit for filing the Company’s responses to additional comments received via telephone from the staff (the “ Staff ”) of the Securities and Exchange Commission (the “ SEC ”) on February 12, 2025 and May 6, 2025, relating to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on August 28, 2024 (the “ Annual Report ”). The responses and information described below are based upon information provided to us by the Company. Please note that all page numbers in our responses are references to the page numbers of the Annual Report. All capitalized terms used but not defined in this letter have the meanings given to them in the Annual Report. Annual Report 4. Comment : Please describe the equity that was issued from Credit.com and held within PGX TopCo II LLC. Please also describe the structure of PGX TopCo II LLC and if the Board/Management or other class of equity holders of PGX TopCo II LLC are affiliates of Prospect Capital Corporation. Response : The Company provides the structure chart of PGX TopCo II LLC below, which was structured for tax planning purposes to manage the Company’s status as a Regulated Investment Company (“ RIC ”) under Subchapter M of the Internal Revenue Code of 1986, as amended. The equity held by PGX TopCo II LLC represents the pro rata interests of the prior PGX Holdings, Inc. First Lien Term Loan holders in Credit.com following a credit bid of the prior First Lien Term Loan for the majority of the assets of PGX Holdings, Inc. As part of the credit bid for the majority assets of PGX Holdings, Inc., the Company was issued 29.37% voting / non-economic (Class A) and 34.23% non-voting / economics (Class B) Units, representing a combined 29.34% economic interest, from PGX HoldCo LLC, the majority holder of Credit.com Holdings, LLC. These units and $999 in cash were subsequently contributed by the Company to PGX TopCo II LLC. PGX TopCo II LLC has two classes of equity, Class A Units and Class B Units (together, the “ Units ”). One Class A Unit is issued and held by Kyle Madan and 999 Class B Units are issued and held by the Company. A majority of the Class A Unit holders have the right to appoint the board of managers of PGX TopCo II LLC; while holders of the Class B Units do not vote on the appointment of the board of managers. Members holding a majority of outstanding Units may, with at least 61 days’ prior notice to the other Members, elect to have Class B Unit holders or their designees purchase all then-outstanding Class A Units at fair market value. The Class A Unit holder and sole manager of PGX TopCo II, LLC is Kyle Madan. Mr. Madan is also an independent director of Town & Country Holdings, Inc., a portfolio company of the Company, and is not an affiliated person of the Company. Supplemental Comment : Response #4 in the correspondence dated December 13, 2024 indicates that Kyle Madan maintains a 0.1% ownership in Credit.com, which is also the voting class. This 2 Securities and Exchange Commission                                May 9, 2025 individual is also noted in the governance structure of Town & Country Holdings, Inc. Please describe if Mr. Madan is an affiliate to Prospect or Prospect-affiliated entities. Additionally, describe if Mr. Madan is the governance structure of any other Prospect investments. Supplemental Response : The Company has informed us that Mr. Madan is not an affiliated person of the Company or, to its knowledge, an affiliated person of any entities that are affiliated persons of the Company. Additionally, the Company has informed us that Mr. Madan is not in the governance structure of any Prospect investments other than those identified in response to this comment. 7. Comment : Please describe if there are any workouts or restructurings with Rosa Mexicano. Additionally, prior to any restructuring, was Rosa Mexicano current with all payments to Prospect Capital Corporation? The Staff notes that the maturity changed for this entity. Response : The Company respectfully notes that while there have been several amendments to the Credit Agreement, there have been no workouts or restructurings with Rosa Mexicano. These amendments have ranged from adjustments to leverage covenants and liquidity support through the COVID-19 time period to maturity extensions as shown most recently. On May 17, 2024, a Seventeenth Amendment to the Credit Agreement was executed, which extended the maturity of both the Revolver and Term Loan from June 13, 2024 to June 13, 2026. The Company confirms that Rosa Mexicano is current with all payments to the Company. Supplemental Comment (1) : Please supplementally provide the percentage of the Company’s portfolio that has had amendments related to maturity extensions. Supplemental Response (1) : The Company has informed us that approximately 29.1% of the Company’s portfolio investments that were held as of June 30, 2024 had maturity extensions that were executed during the Company’s fiscal year ended June 30, 2024 (calculated as percentage of total fair market value and treating each debt tranche of a portfolio company as a separate investment). Supplemental Comment (2) : In future filings, please consider whether additional disclosure is required about amendments related to maturity extensions under Item 303 of Regulation S-K. Supplemental Response (2) : The Company confirms it will make such considerations in respect of future filings. 10. Comment : Related to the preferred stock (any series): (i) does the preferred stock contain put/call features, if so, should such features be accounted for separately from the host instrument? and (ii) can a company redeem or exchange preferred stock at its discretion (are there such provisions in the agreement)? Response : (i) The Company respectfully confirms to the Staff that the preferred stock contains the following put/call features, subject to certain terms as detailed in the relevant prospectus supplement of each series: a) Holder Optional Conversion: With respect to the 5.50% Series A1 Preferred Stock (the “ Series A1 Preferred Stock ”), the 5.50% Series A2 Preferred Stock (the “ Series A2 Preferred Stock ”), the 6.50% Series A3 Preferred Stock (the “ Series A3 Preferred Stock ”), the 5.50% Series M1 Preferred Stock (the “ Series M1 Preferred Stock ”), the 3 Securities and Exchange Commission                                May 9, 2025 5.50% Series M2 Preferred Stock (the “ Series M2 Preferred Stock ”), the 6.50% Series M3 Preferred Stock (the “ Series M3 Preferred Stock ”), the 5.50% Series AA1 Preferred Stock (the “ Series AA1 Preferred Stock ”), the 5.50% Series MM1 Preferred Stock (the “ Series MM1 Preferred Stock ”), the 6.50% Series AA2 Preferred Stock (the “ Series AA2 Preferred Stock ”) and the 6.50% Series MM2 Preferred Stock (the “ Series MM2 Preferred Stock ”) (collectively, the “ 5.50% Preferred Stock and the 6.50% Preferred Stock ”), at any time prior to the listing of the 5.50% Preferred Stock and the 6.50% Preferred Stock on a national securities exchange, shares of the 5.50% Preferred Stock and the 6.50% Preferred Stock are convertible, at the option of the holder of the 5.50% Preferred Stock and the 6.50% Preferred Stock. b) Holder Optional Redemption: With respect to the Floating Rate Series A4 Preferred Stock (the “ Series A4 Preferred Stock ”) and Floating Rate Series M4 Preferred Stock (the “ Series M4 Preferred Stock ”) (collectively, the “ Floating Rate Preferred Stock ”), at any time prior to the listing of the Floating Rate Preferred Stock on a national securities exchange, shares of the Floating Rate Preferred Stock are redeemable, at the option of the holder of such Floating Rate Preferred Stock, on a monthly basis. c) Change of Control Conversion Rights: With respect to the 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock (the “ Series A Preferred Stock ”), except to the extent that the Company has elected to exercise its optional redemption right or the Company’s special optional redemption right (each as described in (ii) below) by providing notice of redemption, upon the occurrence of a Change of Control Triggering Event (as defined below), each holder of Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock held by such holder into a number of shares of the Company’s common stock. The Company confirms that none of the above embedded features require bifurcation and separate accounting from the host instrument. (ii) The Company respectfully notes that it can redeem and/or exchange preferred stock, subject to the terms of each series preferred stock, as detailed in the relevant prospectus supplement of each series: a) Issuer Optional Redemption: Subject to certain limited exceptions allowing earlier redemption, such as the Company determining, in its sole discretion, that doing so would be necessary to comply with the asset coverage requirements under the Investment Company Act of 1940, as amended (the “ 1940 Act ”) or to maintain its status as a RIC, beginning on the earlier of the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock has been issued, or the two year anniversary of the date on which a share of Floating Rate Preferred Stock has been issued or, for listed shares of 5.50% Preferred Stock or 6.50% Preferred Stock, five years from the earliest date on which any series that has been listed was first issued and for listed shares of Floating Rate Preferred Stock, two years from the earliest date on which any series that has been listed was first issued, such share of preferred stock may be redeemed at any time or from time to time at the Company’s option. b) Issuer Optional Conversion: Subject to certain limitations, each share of 5.50% Preferred Stock or 6.50% Preferred Stock may be converted at the Company’s option. 4 Securities and Exchange Commission                                May 9, 2025 c) Optional Redemption: Subject to certain limitations, at any time after the close of business on July 19, 2026 (any such date, an “ Optional Redemption Date ”), at the Company’s sole option, it may redeem the Series A Preferred Stock in whole or, from time to time, in part. The Company may also redeem the Series A Preferred Stock at any time, in whole or, from time to time, in part, including prior to the Optional Redemption Date, pro rata, based on liquidation preference, with all other series of our then outstanding preferred stock, in the event that the Board determines to redeem any series of the Company’s preferred stock, in whole or, from time to time, in part, because such redemption is deemed necessary by the Board to comply with the asset coverage requirements of the 1940 Act or to maintain RIC status. d) Special Optional Redemption: In the event of a Change of Control Triggering Event (as defined in the prospectus supplement dated July 13, 2021), the Company may, at its option, exercise the Company’s special optional redemption right to redeem the Series A Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control Triggering Event occurred. Supplemental Comment : Please provide your accounting analysis with citation to authoritative guidance, including ASC 815-15-25-1, that supports your accounting for the preferred stock and describes the material terms of the agreements. Supplemental Response : Concurrently herewith, the Company is supplementally providing to the Staff Exhibits 1 – 3, containing the Company’s accounting analysis that supports the Company’s accounting for the preferred stock, with appropriate citations to authoritative guidance and description of the material terms of the agreements. The Company notes that while the Exhibits are factually accurate as of their respective dates, the substantive points and analyses remain accurate as of the date hereof. Such additional information is being provided on a confidential basis pursuant to 17 C.F.R. § 200.83. For purposes of this supplemental response, (i) “6.50 Preferred Stock” means, collectively, the Series MM2 Preferred Stock, Series A3 Preferred Stock, Series M3 Preferred Stock, and Series AA2 Preferred Stock and (ii) “5.50% Preferred Stock” means, collectively, the Series MM1 Preferred Stock, the Series A1 Preferred Stock, Series A2 Preferred Stock, Series M1 Preferred Stock, Series M2 Preferred Stock, and Series AA1 Preferred Stock. The Company respectfully notes that Exhibits 1 – 3 should be reviewed in the order presented because the timeline is also relevant to how the Company records transactions pertaining to conversion and redemption features. Exhibit 1: Prospect 5.35% Series A Preferred Stock – July 2021 Issuance This memorandum discusses the accounting treatment of the Series A Preferred Stock and also provides certain re-assessments in respect of the 5.50% Preferred Stock. Exhibit 2: Prospect 6.50% Preferred Stock – October 2022 Issuance This memorandum discusses the accounting treatment of the 6.50% Preferred Stock, and the Company believes the analysis in this memorandum also applies to the 5.50% Preferred Stock 5 Securities and Exchange Commission                                May 9, 2025 because the 5.50% Preferred Stock and the 6.50% Preferred Stock are identical in all material respects except for the stated dividend rate. Exhibit 3: Prospect Floating Rate Preferred Stock – December 2023 Issuance This memorandum discusses the accounting treatment of the Floating Rate Preferred Stock. 13. Comment : Please describe how the valuation associated with National Property REIT Corp. aligns with ASC 820-10-35 Unit of Account. Response: The Company respectfully notes that it has a controlling interest in NPRC, holds both debt and equity positions and deems it appropriate to apply the notion of value maximization as discussed in ASU No. 2011-04. Under the value maximization concept, the Company and any potential market participant would seek to maximize the fair value of an investment to transact at the most advantageous value, which may involve grouping debt and equity into single enterprise value. As a result, the Company values the debt and equity positions together when using an enterprise value approach. The Company notes that while the valuation approach results in one enterprise value for the entire capital position, it is necessary to allocate the fair value of the debt and equity investments as individual units of account and report them separately on the Schedule of Investments. In order to determine the enterprise value of the Company’s investment in NPRC, the value of NPRC’s investments must be determined first. For real estate joint venture companies, gross property values determined by discounted cash flow method less fair value of the third-party mortgage is used to calculate each joint venture’s equity value. NPRC’s equity value in the properties are then determined based on the waterfall structure of each joint venture. Consumer loans and rated secured structured notes are also valued using a discounted cash flow method. NPRC’s equity value in subsidiaries investing in consumer loans and rated secured structured notes are determined by this valuation less any outstanding third-party debt. Supplemental Comment : Response #13 in the correspondence dated December 13, 2024 indicates that the valuation of NPRC results from the Company valuing the classes of assets held by NPRC, such as real estate, property, consumer loans etc. Please supplementally des

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Document

[On letterhead of Simpson Thacher & Bartlett LLP]

January 8, 2025

Via EDGAR

Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549
Attn: Ken Ellington

Re:    Prospect Capital Corporation
Annual Report on Form 10-K (File No. 814-00659)

Dear Mr. Ellington:

On behalf of Prospect Capital Corporation (the “Company”), we transmit for filing the Company’s responses to comments received via telephone from the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) on October 30, 2024, relating to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on August 28, 2024 (the “Annual Report”). The responses and information described below are based upon information provided to us by the Company. Please note that all page numbers in our responses are references to the page numbers of the Annual Report. All capitalized terms used but not defined in this letter have the meanings given to them in the Annual Report.

Annual Report

1.Comment: Please state separately any other category of income which exceeds 5% of the total income (e.g., income from non-cash dividend/income from payments-in-kind interest) on the Statement of Operations as required by Article 6-07.1 of Regulation S-X.

Response: The Company made the requested change effective with its Form 10-Q for the quarterly period ended September 30, 2024.

2.Comment: Footnote 19 does not appear to be associated with any other securities on the Schedule of Investments, please explain and confirm that the rest of the footnotes have been applied correctly.

Response: The Company notes that Footnote 19 was inadvertently omitted from the CLO investment, Symphony CLO XIV, Ltd, in the “Consolidated Schedule of Investments” section of the Annual Report. The Company corrected the omission in its Form 10-Q filed on November 8, 2024, utilizing Footnote 17 to make such designation and confirmed that the rest of the footnotes have been applied correctly.

3.Comment: The Company has 19.1% of its portfolio in equity real estate investment trust (REITs). How has the Company considered disclosure due to this concentration under ASC 275?

Response:  ASC 275 requires financial statement disclosures in the following four areas: (i) nature of operations and activities, (ii) use of estimates, (iii) certain significant estimates and (iv) current vulnerability due to certain conditions. The Company respectfully believes that there is adequate disclosure in its Annual Report’s financial statements to address the requirements of ASC 275. In

Securities and Exchange Commission

 January 8, 2025

addition, the Company further supplements such disclosures in the financial statements within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Annual Report. The Company’s 19.1% REIT concentration is entirely related to its investments in National Property REIT Corp. (“NPRC”), for which separate audited financial statements are attached to the Annual Report as Exhibit 99.1 and Exhibit 99.2. Additionally, the Company makes direct disclosure within the footnotes to the “Consolidated Schedules of Investments” and within the “Notes to Consolidated Financial Statements - Note 3. Portfolio Investments and Note 14. Transactions with Controlled Companies” regarding:

a.NPRC’s primary business activities, such as acquiring, operating, financing, leasing and managing real estate assets, including, but not limited to, industrial, commercial, and multi-family properties,

b.the geographic location and size of the REIT’s properties,

c.the volume and type of business the Company transacts with NPRC (including NPRC’s uses of the funds provided by the Company to carry out the aforementioned activities),

d.the amount and type of revenue the Company receives from its investment in NPRC relative to other sources, and

e.the fair value of NPRC, the certain significant estimates used to determine the fair value, and the uncertainties surrounding those significant estimates.

The Company further notes that “Item 1.A Risk Factors – Risks affecting investment in real estate” discloses the risks relating to investments in real estate and NPRC specifically.

4.Comment: Please describe the equity that was issued from Credit.com and held within PGX TopCo II LLC. Please also describe the structure of PGX TopCo II LLC and if the Board/Management or other class of equity holders of PGX TopCo II LLC are affiliates of Prospect Capital Corporation.

Response: The Company provides the structure chart of PGX TopCo II LLC below, which was structured for tax planning purposes to manage the Company’s status as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended.

The equity held by PGX TopCo II LLC represents the pro rata interests of the prior PGX Holdings, Inc. First Lien Term Loan holders in Credit.com following a credit bid of the prior First Lien Term Loan for the majority of the assets of PGX Holdings, Inc.

As part of the credit bid for the majority assets of PGX Holdings, Inc., the Company was issued 29.37% voting / non-economic (Class A) and 34.23% non-voting / economics (Class B) Units, representing a combined 29.34% economic interest, from PGX HoldCo LLC, the majority holder of Credit.com Holdings, LLC. These units and $999 in cash were subsequently contributed by the Company to PGX TopCo II LLC.

PGX TopCo II LLC has two classes of equity, Class A Units and Class B Units (together, the “Units”).  One Class A Unit is issued and held by Kyle Madan and 999 Class B Units are issued and held by the Company.  A majority of the Class A Unit holders have the right to appoint the board of managers of PGX TopCo II LLC; while holders of the Class B Units do not vote on the appointment of the board of managers.  Members holding a majority of outstanding Units may, with at least 61 days’ prior notice to the other Members, elect to have Class B Unit holders or their designees purchase all then-outstanding Class A Units at fair market value.

The Class A Unit holder and sole manager of PGX TopCo II, LLC is Kyle Madan. Mr. Madan is also an independent director of Town & Country Holdings, Inc., a portfolio company of the Company, and is not an affiliated person of the Company.

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Securities and Exchange Commission

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5.Comment: Credit.com holdings indicate that it is a “syndicated investment which was originated by a financial institution and broadly distributed”. Please describe what is meant by “broadly distributed” as it appears the company is private and information is limited on the syndication.

Response: The Company respectfully notes that the Annual Report and subsequent filings do not identify syndicated investments. The Company notes supplementally for the Staff that “broadly distributed” means that there were multiple financial institutions’ investors involved to spread any risk of the investment among several financial institutions. Such syndication is common and is done on a private basis and does not involve any public offering.

6.Comment: Please describe how Credit.com was valued, include specific effective interest rates utilized in discussion of the equity valuation. The Staff notes that the company recently emerged from bankruptcy with existing first lien loans “rolled” into the new entity and a significant increase in the value to equity securities since March 31, 2024.

Response: The Company respectfully notes that given its lack of control over Credit.com and the security being covered as of the valuation date, the Board of Directors of the Company (the

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 January 8, 2025

“Board”) valued the First Lien Term Loan A using the yield method consistent with the recommendation of the third-party valuation provider. The third-party valuation provider specifically relied on the benchmark analysis, using the internal rate of return at close, to value the security given the business’s high leverage levels and lack of correlation to the broadly syndicated loan market. An unfavorable adjustment factor of 150 bps was applied to the benchmark analysis given the uncertainty regarding the company’s ability to transition its business model.

The Board, consistent with the recommendation of the third-party valuation provider, valued the First Lien Term Loan B using the enterprise value waterfall method as the security was impaired based on the third-party valuation provider’s concluded enterprise value. The enterprise value was derived utilizing the market approach and the income approach (each weighted 50%).

a)A market approach was utilized when determining the value of the legacy business given the identification of similar companies with similar market dynamics. The valuation provider considered trading multiples of selected public companies as well as the initial 2014 acquisition multiple, the LTM revenue multiple implied at close, decline in performance, lower projections, and lower margin profile when selecting an enterprise value multiple range for the market approach (see Appendix A taken from our Annual Report; the highlighted sections relate directly to Credit.com).

b)The valuation provider considered the income approach separately for the legacy business and B2B base case given the different risk / return profiles of each segment and the stages in which they were in as of the valuation date. Within the legacy business income approach, projections were utilized as was a discount rate of 14.50%, which represented an increase in discount rate from the prior period (3/31) given the underperformance and increased uncertainty in the business. Within the B2B income approach, the valuation provider considered discount rates of venture-like rates of return given the B2B segment was in the early stages. A discount rate below venture rates of return was reasonable given the company's existing product, client base, and that Progrexion already had one existing B2B client.

c)The valuation provider also considered an exit multiple income approach in order to capture the potential upside through an exit in FY 2027. A 11.25x exit multiple was assumed, a decrease of 0.25x from the prior period, which approximated the adjusted mean of the size adjusted EV / NCY+2 EBITDA multiples of the selected public companies. Given the increased risk associated with the 11.25x exit in FY 2027, the valuation provider utilized a 45.0% discount rate in the exit multiple case.

In the three income approaches, the third-party valuation provider expanded the discount rate ranges and exit multiples given the high uncertainty of future performance but also the potential upside of the business' rebound.

The Board, consistent with the recommendation of the third-party valuation provider, valued the Company’s indirect ownership in Credit.com's common equity using the approach detailed above for the Term Loan B given its residual claims in equity value (see Appendix A taken from the Annual Report, Footnote 3; the highlighted sections relate directly to Credit.com).

The Company respectfully notes that the fair value of Credit.com decreased, rather than increased, from March 31, 2024 to June 30, 2024.

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Securities and Exchange Commission

 January 8, 2025

7.Comment: Please describe if there are any workouts or restructurings with Rosa Mexicano. Additionally, prior to any restructuring, was Rosa Mexicano current with all payments to Prospect Capital Corporation? The Staff notes that the maturity changed for this entity.

Response: The Company respectfully notes that while there have been several amendments to the Credit Agreement, there have been no workouts or restructurings with Rosa Mexicano. These amendments have ranged from adjustments to leverage covenants and liquidity support through the COVID-19 time period to maturity extensions as shown most recently. On May 17, 2024, a Seventeenth Amendment to the Credit Agreement was executed, which extended the maturity of both the Revolver and Term Loan from June 13, 2024 to June 13, 2026. The Company confirms that Rosa Mexicano is current with all payments to the Company.

8.Comment: It appears a significant amount of investments utilize the “enterprise value waterfall” technique for valuation purposes under ASC 820. Please supplementally describe if this is also utilized for non-control investments.

Response: As of June 30, 2024, 37% of investments were valued utilizing the enterprise value waterfall technique. This technique is utilized for all equity positions. For debt positions, it is utilized if the Company has effective control (meaning a majority stake in the company or the option of control through voting power, etc). The technique is also utilized for debt positions if the Board concludes, at the recommendation of the third-party valuation provider, that the debt is impaired.

9.Comment: Please describe if the debt of National Property REIT Corp. was restructured. The Staff notes that the maturity dates have changed significantly, and the terms of interest do not appear to be favorable to debt holders. Describe the valuation of the debt investments as well as how the debt remains at par post-restructuring with new additional debt issued and how common stock retains its value by continued deficits in the REITs and negative cash flow from operations.

Response: The Company respectfully notes that NPRC’s debt was refinanced on September 29, 2023. The main business purpose of this refinancing was to extend the existing debt that was scheduled to mature at the end of 2023. As a result, the maturity dates of all tranches were extended to March 31, 2026. The Company respectfully notes that no additional debt was issued as part of this refinance.

The debt of NPRC is valued using the enterprise value waterfall method. Based on the enterprise value determined, debt is covered first, and the remaining value is allocated to the equity value. Therefore, since debt is covered first, the debt remains at par post-restructuring. In addition, as discussed in American Institute of Certified Public Accountants Technical Q&A 6910.34, we note that the Company views its investment in NPRC as an aggregate position rather than as separate financial instruments of debt and equity. The Company would rarely, if ever, exit an investment by selling only the debt or equity portion of a single investment. Exits almost always involve selling the debt and equity portion of the investment in its entirety, at which point debt will be redeemed at par value. The Company notes that the common stock value is the residual value after deducting the par value of the debt from the enterprise value.

10.Comment: Related to the preferred stock (any series): (i) does the preferred stock contain put/call features, if so, should such features be accounted for separately from the host instrument? and (ii) can a company redeem or exchange preferred stock at its discretion (are there such provisions in the agreement)?

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Securities and Exchange Commission

 January 8, 2025

Response: (i) The Company respectfully confirms to the Staff that the preferred stock contains the following put/call features, subject to certain terms as detailed in the relevant prospectus supplement of each series as of June 30, 2024:

a)Holder Optional Conversion: With respect to the 5.50% Series A1 Preferred Stock (the “Series A1 Preferred Stock”), the 5.50% Series A2 Preferred Stock (the “Series A2 Preferred Stock”), the 6.50% Series A3 Preferred Stock (the “Series A3 Preferred Stock”), the 5.50% Series M1 Preferred Stock (the “Series M1 Preferred Stock”), the 5.50% Series M2 Preferred Stock (the “Series M2 Preferred Stock”), the 6.50% Series M3 Preferred Stock (the “Series M3 Preferred Stock”), the 5.50% Series AA1 Preferred Stock (the “Se

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Document

[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

March 12, 2024

VIA EDGAR

Lisa N. Larkin

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:    Prospect Capital Corporation (the “Company”)

    Preliminary Proxy Statement Filed on March 1, 2024

Dear Ms. Larkin:

We are in receipt of oral comments provided by you on March 8, 2024 regarding the Company’s preliminary proxy statement filed on March 1, 2024 (the “Proxy Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Proxy Statement discussed below.  These changes will be reflected in the Company’s definitive proxy statement.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Proxy Statement.

Ms. Larkin

March 12, 2024

Page 2

Comments

1.Under the section “Notice of Special Meeting of Stockholders,” in the third paragraph starting with the discussion that the Special Meeting will be held on the Internet, please add the technical support phone numbers.

The Company has communicated with Broadridge Financial Solutions (“Broadridge”), who is running the virtual website for the Special Meeting, and respectfully notes that Broadridge has advised against including the technical support phone numbers because the phone numbers are always subject to change between the printing and mailing of the definitive proxy statement and the date of the Special Meeting. For the reason discussed above, the Company respectfully declines to update the disclosure.

2.Under the section “Notice of Special Meeting of Stockholders,” the fourth paragraph discusses the 16-digit control numbers, please confirm that the 16-digit control numbers will be provided with the final proxy statement.

The Company confirms that the 16-digit control numbers will be provided on the final proxy cards or notices mailed to the Company’s shareholders.

3.Under the section “Vote Required,” in the last sentence of the first paragraph, please remove the discussion of broker non-votes as the Company does not expect there to be any broker non-votes.

The Company has updated the disclosure in accordance with your comment.

*    *    *    *

Ms. Larkin

March 12, 2024

Page 3

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (617) 573-4836.

Sincerely,

/s/ Kenneth E. Burdon
Kenneth E. Burdon

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   Eversheds Sutherland (US) LLP

700 Sixth Street, NW, Suite 700

Washington, DC 20001-3980

D: +1 202.383.0176

F: +1 202.637.3593

stevenboehm@

eversheds-sutherland.com

March 4, 2022

VIA EDGAR

Asaf Barouk, Attorney-Adviser

Division of Investment Management

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

 Re: Application of Prospect Capital Corporation, et al. (File No. 812-15253)

Dear Mr. Barouk:

On behalf of Prospect Capital
Corporation (the “Applicant”), set forth below are the Applicant’s responses to the oral comments provided
by the staff of the Division of Investment Management (the “Staff”) of the U.S. Securities and Exchange Commission
(the “SEC”) on February 7, 2022, regarding the above-referenced Application for an Order pursuant to Sections
6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”) granting an exemption from Section 12(d)(3)
of the 1940 Act, and Rule 12d3-1 under the 1940 Act, filed on August 5, 2021 (the “Application”). The comments
are set forth below and each is followed by the Applicant’s response. Terms used but not defined herein have the meaning ascribed
to them in the Application.

 1. Comment: In Footnote 13, please add to the definition of “Affiliate” the phrase “any affiliated person
of an Applicant within the meaning of Section of 2(a)(3), of the 1940 Act, affiliated persons of such affiliated persons,” after
the first use of the word “Applicant.” Please also delete the phrase “within the meaning of Section of 2(a)(3) of 1940
Act” as it currently exists in Footnote 13.

Response: The Applicants have
revised Footnote 13 to reflect the Staff’s comment.

 2. Comment: Please supplementally explain why Cantilever applies to both registered closed-end
funds (“RCEFs”) and business development companies (“BDCs”) and why it is appropriate
to include registered close-end funds and Future Regulated Funds in the Application.

Response: The Applicants advise
the Staff on a supplemental basis that they believe that the policies underlying the relief in Cantilever apply to RCEFs to the same extent
as they do to BDCs. Cantilever was originally a privately held RCEF at the time of its application, and stated in its application that
within two-and-a-half years it intends to elect to become a BDC in connection with a “public offering”. There was nothing
in its application conditioning or limiting the relief to the time period during which Cantilever remained a RCEF and/or privately held.
Therefore, under the terms of the relief granted to Cantilever, the relief was meant to apply to both RCEFs and BDCs, as well as to privately
held and public investment companies.

Eversheds
Sutherland (US) LLP is part of a global legal practice, operating through various separate and distinct legal entities, under Eversheds
Sutherland. For a full description of the structure and a list of offices, please visit www.eversheds-sutherland.com.

  March 4, 2022

Page 2

For purposes of the
relief sought, there is no basis for distinction between BDCs and RCEFs, nor between privately held and public investment companies. Read
together with Section 60, Section 12(d)(3) applies equally to BDCs and RCEFs, and makes no distinction between privately held and public
investment companies. Indeed, there is nothing included in the regulation of RCEFs about permitted investment strategies that would encourage
or discourage them from investing in investment advisers any differently than would be the case for BDCs. In addition, while any Applicant
that is a BDC may be required to provide managerial assistance to an Investment Manager in which it invests in reliance on the proposed
relief, if granted, there is nothing that would prevent RCEFs from offering to provide such assistance and providing such assistance upon
acceptance of such an offer. In addition, the filings required to be made by privately held and public investment companies provide for
almost identical disclosure. For these reasons, we believe that Cantilever applies to both RCEFs and BDCs, as well as to privately held
and public investment companies.

With respect to Future
Regulated Funds, we see no basis to distinguish the relief being sought here to the relief granted to Future Regulated Funds in the myriad
exemptive orders granted in the co-investment context. Here, as in those other exemptive orders, there should be no opportunity for abuse
since the Future Regulated Funds would be subject to the same conditions as the existing funds, and the proposed Conditions would provide
the same level of protection as they would for the existing funds. As described on page 3 of the Application, the Future Regulated Funds
would operate in fundamentally the same way as the existing funds (investing primarily in private debt, and, if the relief sought is granted,
investing in Investment Mangers). It is conceivable, perhaps even likely, that Canitlever did not intend to have any additional BDCs or
RCEFs on its platform and thus did not need to request relief in that regard, explaining the absence of this requested relief from its
application.

 3. Comment: Please supplementally explain whether the Applicants are the same as Cantilever.

Response: The Applicants advise
the Staff on a supplemental basis that for the purposes of the Application, the fund Applicants and any Future Regulated Fund (together,
the “Funds”) are fundamentally the same as Cantilever. All of the Funds will operate as non-diversified, closed-end,
externally managed companies, just as Cantilever operated. Any differences between the Applicants and Cantilver concerning distinctions
between RCEFs and BDCs and privately held and public investment companies are immaterial in terms of the relief sought, as addressed in
Comment 2. To the extent that there are other differences between the Funds and Cantilever, these differences support the request for
relief here. Cantilever exclusively invested in Investment Managers, whereas the Funds will invest in Investment Managers only as a part
of an overall strategy and not as an exclusive asset class.

 4. Comment: Please supplementally discuss how the proposed Conditions would apply to all funds
in the fund complex, and how this would be consistent with the three public policy concerns that underlie Section 12(d)(3).

Response: The Applicants advise
the Staff on a supplemental basis that they intend to further amend their compliance policies and procedures, so that they are designed
to ensure that the proposed Conditions would be met by each of the Funds to the extent they invest in Investment Managers. It is common
for investment platforms with multiple funds to have compliance policies and procedures to address such arrangements. The Applicants currently
have a compliance structure in place for the multiple funds in the Prospect complex. The Applicants believe those policies and procedures
are adequate to address the compliance needs of each of its funds, and once amended they will be adequate to ensure compliance with the
requested relief for multiple funds.

  March 4, 2022

Page 3

The Funds’ operations
under their compliance policies and procedures and in line with the proposed Conditions would be consistent with the three public policy
concerns that underlie Section 12(d)(3). The Applicants do not believe that the existence of multiple funds fundamentally alters the dynamic
present in Cantilever with respect to these concerns.

First, with respect
to the concern related to avoiding entrepreneurial risks, the presence of multiple funds in the fund complex does not create any additional
risks other than those addressed in Cantilever. At the time Section 12(d)(3) was enacted, most Investment Managers were in partnership
form, but, as “the Commission has noted since 1940 the ownership structure of most securities related issuers has changed…to
a corporate form, resulting in the limited liability status of these entities. The Commission has further stated that ‘[a]side from
general partnership interests, investments in securities issued by securities related businesses need not be subject to any special standards
not applicable to investments in other businesses, except to address the potential for conflicts of interests and reciprocal practices.’”1
Further, each Fund’s shareholders will be informed of any entrepreneurial risk through ongoing or initial disclosure, just as in
Cantilever.

Next, with respect to
the concern related to eliminating reciprocal practices between investment companies and securities related businesses, the proposed Conditions
address the concern regardless of the number of funds in the fund complex. One such proposed Condition prohibits any Investment Manager
in which any of the Funds invest from buying, selling or otherwise trading securities issued by the Funds or any of their Affiliates.
Another proposed Condition prevents any of the Funds, or their respective Affiliates, from using any Investment Manager or any Affiliate
thereof as a broker-dealer for the purchase of any portfolio securities. Because these proposed Conditions apply to Affiliates as well
as the Funds, the number of funds in the fund complex does not affect the analysis. As discussed, compliance policies and procedures put
in place by the Applicants will be designed to ensure compliance with the proposed Conditions.

Finally, with respect
to the concern related to the liquidity of an investment company’s portfolio, each of the Funds by its very nature makes substantially
all of its investments in illiquid assets, just as in Cantilever, and the full and complete disclosure provided in offering and periodic
reporting documents make this clear. Put simply, investors in the Funds invest for the specific purpose of holding interests in an entity
that holds illiquid assets.

 5. Comment: Please supplementally discuss how proposed Conditions 2 and 7 would operate in
the context of multiple funds, considering the requested changes made to the definition of “Affiliate” in Footnote 13, and
how this would be consistent with the three public policy concerns that underlie Section 12(d)(3), especially the concern related to conflicts
of interest and reciprocal practices.

Response: The Applicants respectfully
advise the Staff on a supplemental basis that Conditions 2 and 7 would operate, in the context of the multiple funds involved here, consistent
with the manner contemplated by the Cantilever order.

With respect to Condition
2, it once again comes down to compliance policies and procedures. With respect to entrepreneurial risk and liquidity concerns, please
see our responses in Comment 4, above. With respect to reciprocal practices, the process for causing Investment Managers and their Affiliates
to comply with the proposed Condition would be no different with multiple funds then with a single fund; that is each Investment Manager
would be apprised of the fund that was investing in it and agree to the requirements of Condition 2 with respect to each investing fund.
Again, the compliance policies and procedures for each of the Funds would specifically require that each applicable Investment Manager
provide to the Fund’s Chief Compliance Officer (“CCO”) the information necessary for the CCO to ensure
compliance with the proposed Condition.

1 In the Matter of Cantilever Capital, LLC and Cantilever Group, LLC (File No. 812-13781), page 7.

  March 4, 2022

Page 4

With respect to Condition
7, once again the Applicants believe that their compliance policies and procedures will be adequate to address the quantitative limitations
set forth in this proposed Condition. The Funds’ CCOs already monitor quantitative compliance requirements, and could do so effectively
with respect to the requirements of this proposed Condition.

With respect to the
expansion of the parties identified as Affiliates in Footnote 13, the Applicants do not believe that it should raise concerns. As it relates
to the proposed Conditions, this expansion simply means that Fund CCOs will have to request from Investment Managers a broader range of
information than would be required under Cantilever. The fact that multiple funds are involved would not affect that process, other than
potentially to increase the number of Investment Managers’ close and remote affiliations that would be required to be part of any
diligence process. It is worth noting that given that the Applicants have a co-investment order, it may be that the number of Investment
Managers in which the Funds invest may not be significantly greater than that in which a single fund would invest.

 6. Comment: Please supplementally discuss how the Applicant will ensure compliance with multiple
portfolio affiliates as a result of multiple funds investing in different investment managers.

Response: The Applicants advise
the Staff on a supplemental basis that while they recognize that investment by multiple funds in multiple portfolio affiliates could create
some level of greater complexity, they note that until they have experience operating under the requested order, it is difficult to predict
with certainty how the Applicants’ compliance apparatus will develop to ensure compliance in that regard. The Applicants will, however,
put in place specific policies and procedures to ensure compliance with respect to portfolio affiliates. Specifically, the Applicants
would revise their compliance policies and procedures, with the review and consent of their non-interested directors, to take into account
the need to monitor compliance under the requested order. As the Applicants gain more experience operating under the requested order,
if granted, they would from time to time review the development of their compliance policies and procedures to ensure proper adaptation
in line with the order as to any additional complexities that may arise.

 7. Comment: Please supplementally discuss how the Applicants will ensure that both advisers
and funds and their affiliates will not use material nonpublic information (“MNPI”) from the investment managers
they invest in.

Response: The Applicants respectfully
advise the Staff on a supplemental basis that they will implement policies and procedures reasonably designed to prevent investment personnel
from using MNPI concerning the respective portfolio investments of the Investment Managers. Specifically, to the extent an Applicant knows,
or an Applicant’s compliance policies and procedures identify that the Applicant should know, of the portfolio companies in which
Investment Managers are putting their clients, they would be required to place those companies on a restricted list, preventing an Applicant
from effecting investments in them, absent clearance from the Fund’s respective CCO.

 8. Comment: In Condition 1, please replace the phrase “the Companies’ investments”
with “a Company’s investment.”

Response: The Applicants have
revised Condition 1 to reflect the Staff’s comment.

  March 4, 2022

Page 5

 9. Comment: Please supplementally discuss why the changes made from the Cantilever application
to Condition 5 are not material.

Response: The Applicants have
revised Condition 5 so that it reflects Cantilever’s application.

*	*	*

If you have any questions or additional
comments concerning the foregoing, please contact the undersigned at (202) 383-0176 or Lea Schild at (202) 383-0310.

  Sincerely,

  /s/ Steven B. Boehm

  Steven B. Boehm

  Cc:
  Joseph Toner, Acting Branch Chief

  Russell Wininger, Esq., Prospect Capital Management,
L.P.

  Lea Schild, Esq., Eversheds Sutherland (US) LLP

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[On letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

March 15, 2021

VIA EDGAR

Lisa N. Larkin

Division of Investment Management

Securities and Exchange Commission

100 F Street N.E.

Washington, DC 20549

RE:    Prospect Capital Corporation – Preliminary Proxy Statement on Schedule 14A

Dear Ms. Larkin:

Thank you for your oral comments on March 12, 2021 regarding your review of the preliminary proxy statement on Schedule 14A filed by Prospect Capital Corporation (the “Company”) with the U.S. Securities and Exchange Commission (“SEC”) on March 5, 2021 (the “Preliminary Proxy Statement”). The Company has considered your comments and authorized us to respond on its behalf as set forth below. Your oral comments are summarized in bold, followed by the Company’s responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Preliminary Proxy Statement.

* * * * * * *

Lisa Larkin

March 15, 2021

Page 2

Comments and Responses

1.We note that the Company intends to conduct the Special Meeting virtually. Please note the SEC staff’s guidance on virtual meetings published on March 13, 2020, April 7, 2020 and January 5, 2021.

The Company notes the referenced guidance.

2.The Preliminary Proxy Statement indicates that broker non-votes will count toward a quorum. Please explain to us why the Company believes the Proposal is a routine matter on which brokers have discretion to vote under NYSE Rule 452 or, alternatively, revise the disclosure in the Preliminary Proxy Statement to indicate that the Company does not expect any broker non-votes.

The Company does not expect any broker non-votes and has revised the referenced disclosure accordingly.

3.In the first paragraph under “Reasons to Offer Common Stock Below NAV Per Share”, there is a reference to “write-offs” in the financial services sector. Please include a plain English parenthetical explaining what a “write-off” is.

The Company added the following parenthetical: “(i.e., reducing the value of an owned asset to zero)”.

4.Please confirm that the Company’s proxy card will contain discretionary voting authority with respect to adjournments in accordance with Exchange Act Rule 14a-4.

The Company has informed us that the Company’s proxy card, which will be included with its definitive proxy statement filing, will contain the following language: “Additionally, the votes entitled to be cast by the undersigned will be cast in the discretion of the proxies named above on any other matter that may properly come before the Special Meeting, including a motion to adjourn the Special Meeting or postpone the Special Meeting to another time and/or place for the purpose of soliciting additional proxies, or any adjournment or postponement thereof.”

* * * * * * *

Lisa Larkin

March 15, 2021

Page 3

Should you have any additional comments or concerns, please do not hesitate to contact me at (617) 573-4836.

Best regards,

/s/ Kenneth E. Burdon

Kenneth E. Burdon

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

March 5, 2021

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

RE:    Prospect Capital Corporation

(File No. 814-00659)—Preliminary Proxy Statement

Ladies and Gentlemen:

On March 5, 2021, Prospect Capital Corporation (the “Company”) filed a Preliminary Proxy Statement on Schedule 14A (the “Preliminary Proxy Statement”) in connection with the Company’s special meeting of stockholders (the “Stockholder Meeting”). The Company has filed the Preliminary Proxy Statement because the proposal relates to an approval to sell shares of common stock below net asset value per share.  The Preliminary Proxy Statement was filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the General Rules and Regulations of the Securities and Exchange Commission promulgated thereunder.

If you have any questions or require any further information with respect to this filing, please call me at (617) 573-4836.

Very truly yours,

/s/ Kenneth E. Burdon

                        Kenneth E. Burdon

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

September 28, 2020

VIA EDGAR

Lisa N. Larkin

Division of Investment Management

Securities and Exchange Commission

100 F Street N.E.

Washington, DC 20549

RE:

 Prospect Capital Corporation – Preliminary Proxy Statement on Schedule 14A

Dear Ms. Larkin:

Thank you for your oral comments on September 25, 2020 regarding your review of the preliminary proxy statement on Schedule 14A filed by Prospect Capital Corporation (the “Company”) with the U.S. Securities and Exchange Commission (“SEC”) on September 18, 2020 (the “Preliminary Proxy Statement”). The Company has considered your comments and authorized us to respond on its behalf as set forth below. Your oral comments are summarized in bold to the best of our understanding, followed by the Company’s responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Preliminary Proxy Statement.

* * * * * * *

Comments and Responses

1.

 We note that the Company may conduct the Annual Meeting virtually. Please note the SEC staff’s guidance on virtual meetings published on March 13, 2020 and April 7, 2020.

The Company notes the referenced guidance.

2.

 Please add disclosure regarding the presence or absence of appraisal rights in accordance with Item 3 of Schedule 14A.

The Company made the requested change.

3.

 On page 20 of the Preliminary Proxy Statement, please add a footnote indicating the source of the assertion that 90% of listed BDCs have a classified board.

The Company made the requested change.

4.

 On page 21 of the Preliminary Proxy Statement, the Company asserts the following:

In connection with this year’s annual stockholder meeting, the First Cane Proponent, the Second Cane Proponent (daughter of the First Cane Proponent) and the Third Cane Proponent (wife of the First Cane Proponent) attempted to submit multiple (no fewer than six) proposals, all from the same address, under the guise that each immediate family member was an independent proponent.

Please revise this statement to clarify that this is the Board of Directors’ or the Company’s belief.

The Company made the requested change.

5.

 On page 24 of the Preliminary Proxy Statement, the Company states, “First, the Third Cane Proponent’s supporting statement includes blatant mathematical falsehoods in calculating the Company’s performance, such as stating that the Company’s calendar year 2019 total return was 6.3% when it was in fact 13.8%.” In correspondence dated August 27, 2020 (the “August 27 Cane Letter”), the Third Cane Proponent acknowledged that this calculation was an error and proposed corrective language. In the Third Cane Proponent’s supporting statement, please make the correction to the Company’s returns included in the August 27 Cane Letter and modify or delete the referenced sentence in the Company’s opposition statement as appropriate.

The Company made the requested change.

* * * * * * *

Should you have any additional comments or concerns, please do not hesitate to contact me at (617) 573-4836.

Best regards,

/s/ Kenneth E. Burdon

Kenneth E. Burdon

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

September 18, 2020

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

RE:Prospect Capital Corporation

(File No. 814-00659)-Preliminary Proxy Statement

Ladies and Gentlemen:

On September 18, 2020, Prospect Capital Corporation (the “Company”) filed a Preliminary Proxy Statement on Schedule 14A (the “Preliminary Proxy Statement”) in connection with the Company’s 2020 annual meeting of stockholders (the “Annual Meeting”). The Company has filed the Preliminary Proxy Statement because a stockholder has asserted that he “may” seek to nominate himself for a director position at the Annual Meeting and accordingly may initiate a solicitation in opposition.  The Preliminary Proxy Statement was filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended, and the General Rules and Regulations of the Securities and Exchange Commission promulgated thereunder.

If you have any questions or require any further information with respect to this filing, please call me at (617) 573-4836.

Very truly yours,

/s/ Kenneth E. Burdon

Kenneth E. Burdon

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April 20, 2020

VIA EDGAR

Lisa N. Larkin

Division of Investment Management

Securities and Exchange Commission

100 F Street N.E.

Washington, DC 20549

RE:Prospect Capital Corporation - Preliminary Proxy

Statement on Schedule 14A

Dear Ms. Larkin:

Thank you for your oral comments on April 17, 2020 regarding your review of the preliminary proxy statement on Schedule 14A filed by Prospect Capital Corporation (the “Company”) with the U.S. Securities and Exchange Commission (“SEC”) on April 10, 2020 (the “Preliminary Proxy Statement”). The Company has considered your comments and authorized us to respond on its behalf as set forth below. Your oral comments are summarized in bold, followed by the Company’s responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Preliminary Proxy Statement.

* * * * * * *

Comments and Responses

1.

 We note that the Company intends to conduct the Special Meeting virtually. Please note the SEC staff’s guidance on virtual meetings published on March 13, 2020 and April 7, 2020.

The Company notes the referenced guidance.

2.

 With respect to the required vote, we note that the proxy statement provides for two methods of approval, one based on Section 63 of the 1940 Act, and one based on Section 23 of the 1940 Act. Please supplementally explain to us the basis for obtaining approval to issue the Company’s common stock below net asset value using either of these methods instead of both of them. Please also supplementally explain whether the Company believes it is a good business practice for the Company to seek approval under Section 23 of the 1940 Act.

Section 23(b) of the 1940 Act states:

No registered closed-end company shall sell any common stock of which it is the issuer at a price below the current net asset value of such stock, exclusive of any distributing commission or discount (which net asset value shall be determined as of a time within forty-eight hours, excluding Sundays and holidays, next preceding the time of such determination), except . . . (2) with the consent of a majority of its common stockholders . . . .

Section 63 of the 1940 Act states that, notwithstanding the exemption contained in Section 6(f) of the 1940 Act,1 Section 23 of the 1940 Act applies to a business development company to the same extent as if it were a registered closed-end investment company. Section 63(2) of the 1940 Act states:

Notwithstanding the provisions of section 23(b) of [the 1940 Act], a business development company may sell any common stock of which it is the issuer at a price below the current net asset value of such stock . . . if - (A) the holders of a majority of such business development company’s outstanding voting securities, and the holders of a majority of such company’s outstanding voting securities that are not affiliated persons of such company, approved such company’s policy and practice of making such sales of securities at the last annual meeting of shareholders or partners within one year immediately prior to any such sale, except that the shareholder approval requirements of this subparagraph shall not apply to the initial public offering by a business development company of its securities . . . .

Therefore, the default position of the 1940 Act is that business development companies are subject to Section 23(b)(2)’s stockholder approval requirement to sell common stock below net asset value. Section 63(2) provides a separate, but optional, method by which a business development company can obtain stockholder approval to sell its common stock below net asset value. It is an

1 Section 6(f) of the 1940 Act provides that business development companies are exempt from Sections 1 through 53 of the 1940 Act except to the extent provided in Sections 59 through 65 of the 1940 Act.

exemption from Section 23(b),2 not a requirement in addition to Section 23(b) or a modification of Section 23(b) as it applies to business development companies. Therefore, satisfying either voting standard will suffice.

The Company’s Board of Directors believes that it is in the best interests of the Company and its stockholders for the Company to have the ability to sell its common stock below net asset value. The reasons for this conclusion, which is committed to the Board of Directors’ business judgment, are set forth in the Preliminary Proxy Statement. The Company therefore believes it is good business practice to use available legal means to effectuate that business judgment. Given that the applicable law here - the 1940 Act - permits approval of a business development company’s sale of common stock below net asset value if either of two applicable stockholder voting standards are satisfied, the Company believes that it is appropriate and good business practice to avail itself of whichever of these standards is met.

3.

 Please confirm that the Company’s proxy card will contain discretionary voting authority with respect to adjournments in accordance with Exchange Act Rule 14a-4.

The Company has informed us that the Company’s proxy card, which will be included with its definitive proxy statement filing, will contain the following language: “Additionally, the votes entitled to be cast by the undersigned will be cast in the discretion of the proxies named above on any other matter that may properly come before the Special Meeting, including a motion to adjourn the Special Meeting or postpone the Special Meeting to another time and/or place for the purpose of soliciting additional proxies, or any adjournment or postponement thereof.”

* * * * * * *

2 That is, Section 63(2) states its stockholder approval method can be used “notwithstanding the provisions of section 23(b),” which means Section 23(b) applies unless Section 63(2) is complied with, but that compliance with Section 63(2) is not mandatory if Section 23(b) is complied with.

Should you have any additional comments or concerns, please do not hesitate to contact me at (617) 573-4836.

Best regards,

/s/ Kenneth E. Burdon

Kenneth E. Burdon

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

April 13, 2020

VIA EDGAR

Lisa N. Larkin

Division of Investment Management

Securities and Exchange Commission

100 F Street N.E.

Washington, DC 20549

RE:    Prospect Capital Corporation - Preliminary Proxy Statement on Schedule 14A

Dear Ms. Larkin:

Thank you for your oral comments on April 10, 2020 regarding your review of the preliminary proxy statement on Schedule 14A filed by Prospect Capital Corporation (the “Company”) with the U.S. Securities and Exchange Commission (“SEC”) on April 3, 2020 (the “Preliminary Proxy Statement”). The Company has considered your comments and authorized us to respond on its behalf as set forth below. Your oral comments are summarized in bold, followed by the Company’s responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Preliminary Proxy Statement.

We note that, due to timing constraints, the Company has already printed its definitive proxy statement; therefore, disclosure revisions requested by your comments will be reflected in a supplement to the definitive proxy statement (the “Proxy Supplement”) to be filed with the SEC as additional definitive soliciting material pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).

* * * * * * *

Comments and Responses

1.

 We note that the Company intends to conduct the Special Meeting virtually. Please note the SEC staff’s guidance on virtual meetings published on March 13, 2020 and April 7, 2020.

The Company notes the referenced guidance.

2.

 In accordance with Item 3 of Schedule 14A, please indicate whether stockholders have rights of appraisal in connection with Proposal I and Proposal II.

The Company will add disclosure in the Proxy Supplement responsive to this comment.

3.

 In the first two paragraphs of Proposal II, the Company uses “1:1” to describe the debt-to-equity ratio equivalent of 200% “asset coverage” under the 1940 Act, and “2:1” to describe the debt-to-equity ratio equivalent of 150% “asset coverage” under the 1940 Act. Please also add examples using dollar equivalents (i.e., “$1 of debt for every $1 of common stock”).

The Company will add clarifying disclosure in the Proxy Supplement.

4.

 To the extent applicable, please add disclosure explaining whether the Company’s Board of Directors considered the impact of Proposal II on the advisory fees paid by the Company. For example, could additional leverage increase the base management fee payable and/or trigger payment of the incentive fee regardless of the Company’s performance?

The Company notes that the impact of Proposal II on advisory fees is set forth in the expense table under the caption “Recommendation and Rationale-Potential impact on net investment income, return to stockholders and net asset value-Effect of Leverage on Expenses.” The first paragraph under the caption “Recommendation and Rationale” in Proposal II states, “The Board concluded that Proposal 2 is in the best interests of the Company and the stockholders. In doing so, the Board considered and evaluated various factors, including the following (each, as discussed more fully below): . . . [bullet point] the potential impact (both positive and negative) on net investment income, return to stockholders and net asset value.” The Company believes that the existing disclosure in the Preliminary Proxy Statement sufficiently addresses the considerations of its Board of Directors in regards to the impact of Proposal II on the Company’s advisory fees. Nonetheless, the Company will add additional clarifying discussion in the Proxy Supplement.

5.

 Please confirm that the Company’s proxy card will contain discretionary voting authority with respect to adjournments in accordance with Exchange Act Rule 14a-4.

The Company has informed us that the Company’s proxy card, which will be included with its definitive proxy statement filing, will contain the following language: “Additionally, the votes entitled to be cast by the undersigned will be cast in the discretion of the proxies named above on any other matter that may properly come before the Special Meeting, including a motion to adjourn the Special Meeting or postpone the Special Meeting to another time and/or place for the purpose of soliciting additional proxies, or any adjournment or postponement thereof.”

* * * * * * *

Should you have any additional comments or concerns, please do not hesitate to contact me at (617) 573-4836.

Best regards,

/s/ Kenneth E. Burdon

Kenneth E. Burdon

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September 12, 2019

VIA EDGAR

Jay Williamson, Attorney Adviser

United States Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

 Registration Statement (File No. 333-232998) of

Prospect Capital Corporation (the "Fund")

Dear Mr. Williamson:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Fund hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on September 12, 2019 so that it may become effective by 2:00 p.m. (New York time) on September 16, 2019 or as soon thereafter as practicable.

The Fund hereby requests that you notify Steven Grigoriou (416-777-4727) or Michael K. Hoffman (212-735-3406) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Kristin V. Dask_________________

Name: Kristin V. Dask

Title: Chief Financial Officer, Chief Compliance Officer,

         Treasurer and Secretary

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

September 12, 2019

VIA EDGAR

Jay Williamson, Attorney Adviser

Megan Miller, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE:

 Registration Statement (333-232998) of

Prospect Capital Corporation (the “Company”)

Dear Mr. Williamson and Ms. Miller:

We are in receipt of oral comments provided by each of you on September 11, 2019 regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 2 (the “Amendment”) to the Registration Statement, which is being filed today.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

Disclosure Comment:

1.

 In the Senior Securities table beginning on page 74 of the Registration Statement, please disclosure the same Asset Coverage Per Unit for each class of senior security (i.e. an Asset Coverage Per Unit for senior secured debt, an Asset Coverage Per Unit for unsecured debt and an Asset Coverage Per Unit for total senior securities).

The Company has updated the Senior Securities table in accordance with your comment.

Accounting Comments:

2.

 In the lead in paragraph to the Senior Securities table beginning on page 74 of the Registration Statement, please specifically disclose that the Senior Securities table has been audited.

The Company has updated the disclosure in accordance with your comment.

3.

 In the table on page 72 of the Company’s Form 10-K filing, in future financial statement filings, please disclose separately first lien and unitranche loans.

The Company will revise the disclosure in future financial statement filings in accordance with the comment.

4.

 Please confirm that the Fund has its fidelity bond and will file it as required by Rule 17g-1.

The Company confirms that it has its fidelity bond and will file it as required by Rule 17g-1 once final documentation is received from the insurance provider.

5.

 In future financial statement filings, in the Company’s Consolidated Schedules of Investments, please note which first lien loans are unitranche loans or subject to co-lending arrangements or agreements among lenders.

The Company will revise the disclosure in future financial statement filings in accordance with the comment, if applicable.

6.

 In the Company’s Consolidated Schedules of Investments, we note that the Company’s SESAC Holdco II LLC investment increased between June 30, 2018 and June 30, 2019; however, the Acquisition Date column did not change.  In future financial statement filings, please indicate the Acquisition Date for the original investment and any follow-on investments.

The Company will revise the disclosure in future financial statement filings in accordance with the comment.

*    *    *    *    *

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (416) 777-4727 or Michael K. Hoffman at (212) 735-3406.

Sincerely,

/s/ Steven Grigoriou

Steven Grigoriou

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

August 30, 2019

VIA EDGAR

Jay Williamson, Attorney Adviser

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE:

 Registration Statement (333-232998) of
Prospect Capital Corporation (the “Company”)

Dear Mr. Williamson:

We are in receipt of oral comments provided by you on August 28, 2019 regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 1 (the “Amendment”) to the Registration Statement, which is being filed today.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

1

Mr. Williamson

August 30, 2019

Page 2

Disclosure Comments:

1.    On July 12, 2019, the staff (the “Staff”) of the United States Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets, and the Office of the Chief Accountant issued a statement on the London Interbank Offered Rate (“LIBOR”) that encouraged market participants to begin managing their transition away from LIBOR and provided guidance regarding disclosure concerns raised by the transition. As a business development company that engages in direct origination of floating-rate loans and invests in floating-rate loans and collateralized loan obligations, the topics raised in the statement are relevant to the Company’s business disclosure. Please tell us in correspondence how the Company is planning for the transition and how its existing disclosure addresses the questions raised in the statement to the extent applicable. In responding, please note the Staff’s belief that investors may be interested in understanding how management is assessing and monitoring the transition from LIBOR, including operational steps the Company is taking, significant issues being encountered, and any impacts to fund valuation and interest income and spreads received. If appropriate, please provide model draft disclosure for future filings.

The Company has been closely monitoring developments in the LIBOR market.  The Company will continue to monitor developments in the LIBOR market and is studying alternatives.

Recently, a substantial number of the debt and CLO securities in which the Company typically invests have included, or have been amended to include, language permitting the issuer or investment manager to implement a market replacement rate (like those proposed by the Alternative Reference Rates Committee of the Federal Reserve Board, the Loan Syndications and Trading Association and the Federal Reserve Bank of New York) upon the occurrence of certain material disruption events. However, we cannot ensure that all instruments in which we are invested will have such provisions, nor can we ensure the issuer or investment managers will undertake the suggested amendments when able. We believe that because issuers, investment managers and other CLO and corporate loan market participants have been preparing for an eventual transition away from LIBOR, we do not anticipate such a transition to have a material impact on the liquidity or value of any of our LIBOR-referenced  investments. However, because the future of LIBOR at this time is uncertain, the specific effects of a transition away from LIBOR cannot be determined as of the date of the Amendment.

The Company has not offered floating rate Prospect Capital InterNotes® since April 2013.

Once the Company has definitive information concerning the future of LIBOR and its replacement, should such replacement take effect, it will promptly update its disclosures.

2.    In the Prospectus Summary, on page 6 under Recent Developments, please revise here or in another location to include the asset coverage ratio as of a recent date.

2

Mr. Williamson

August 30, 2019

Page 3

The Company has revised the disclosure in accordance with the comment and included the requested disclosure under “The Offering – Ranking” in the Prospectus Summary.

3.    On page 51 of the Registration Statement, we note that the Company may issue floating-rate notes based on LIBOR. To the extent that the Company’s floating-rate notes based on LIBOR may extend beyond 2021, please briefly address the fallback language the Company intends to use as well as any alternative reference rate. In this respect, it is unclear whether the language on page 51 is intended to address the Company’s fallback language and whether or not this represents market standard. To the extent the Company is using language that does not reflect market standard, please explain why and ensure the Company is appropriately describing the operation of, and risks associated with, its fallback language. Please provide the actual fallback language that will be included in your floating-rate notes as part of the Company’s response.

After discussions with the agents, the Company has included more robust fallback LIBOR language, which it believes to be consistent with market practice, to be included in any floating-rate note that is issued.  The Company has also included as an exhibit to the Amendment a form of supplemental indenture that includes the additional fallback language.

4.    On the Senior Securities table beginning on page 74 of the Registration Statement, please revise to indicate whether the table is audited or not.

The Company has revised the disclosure in accordance with the comment.

5.    On the Senior Securities table beginning on page 74 of the Registration Statement, given the discrepancy between the Asset Coverage Per Unit for individual notes (i.e. the 2020 Notes vs 2022 Notes), please revise the disclosure, and explain in greater detail supplementally, regarding how the Company is calculating asset coverage ratios.

The Company’s asset coverage ratios in the Senior Securities table includes disclosure of the asset coverage for each specific senior security outstanding as well as the asset coverage for the aggregate amount of senior securities outstanding.  For each senior security, the asset coverage is calculated using the ratio of (i) the total value of total assets, less all liabilities and indebtedness not represented by senior securities, and (ii) the aggregate amount of each such senior security.  For purposes of calculating the asset coverage for the aggregate senior securities outstanding, such figure is replaced in the denominator.  The Company believes that its disclosure provides investors with better and more transparent information regarding the Company’s capital structure and asset coverage.  Below are examples of the Company’s calculations for each senior security for the fiscal year ending June 30, 2019.

3

Mr. Williamson

August 30, 2019

Page 4

6.    On page 135 of the Registration Statement, we note the Company’s disclosure that an agent, including the purchasing agent, may be deemed to be an “underwriter” under the Securities Act of 1933. Given the compensation the agents will receive in their role distributing the notes, it appears that they are “underwriters.” Please advise or revise as appropriate.

The disclosure has been revised to state that the agents are deemed to be underwriters under the Securities Act of 1933.

*    *    *    *    *

4

Mr. Williamson

August 30, 2019

Page 5

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (416) 777-4727 or Michael K. Hoffman at (212) 735-3406.

Sincerely,

/s/ Steven Grigoriou

Steven Grigoriou

5

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

August 2, 2019

Jay Williamson, Senior Counsel

Division of Investment Management

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

RE:

 Prospect Capital Corporation (the "Company")

Dear Mr. Williamson:

On August 2, 2019, the Company filed a Registration Statement on Form N-2 (File No. 333-[       ]) (the "Registration Statement") under the Securities Act of 1933 (the "Securities Act") pursuant to which it will be offering, on a continuous basis pursuant to Rule 415(a)(1)(ix) of the Securities Act (“Rule 415(a)(1)(ix)”), up to $500,000,000 of the Company’s Prospect Capital InterNotes® (the “Notes”).

You have requested that we communicate to the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission how the plan of distribution, and related agreements, relating to the offering of the Notes are designed to fit within a continuous offering framework pursuant to Rule 415(a)(1)(ix).

Under Rule 415(a)(1)(ix), securities may be registered for an offering to be made on a continuous basis in the future to the extent that the corresponding registration statement pertains only to securities, the offering of which will (1) commence promptly, (2) be made on a continuous basis and (3) continue for a period in excess of 30 days from the date of initial effectiveness. The Company advises the Staff that, pursuant to the selling agent agreement (the “Selling Agent Agreement”) that will be entered into between the Company, Prospect Capital Management L.P. and Prospect Administration LLC, the Purchasing Agent to be name therein (the “Purchasing Agent”) and the other Agents to be named therein (the “Named Agents” and, together with the Purchasing Agent, the “Agents”), and as described in the Plan of Distribution section of the Prospectus that is a part of the Registration Statement

(the “Prospectus”), the offering will (i) commence promptly, (ii) be conducted on a continuous basis during weekly offering periods and (iii) will continue for a period in excess of 30 days from the date of initial effectiveness of the Registration Statement. The Company intends to commence offering the Notes pursuant to the Selling Agent Agreement on the day that the Registration Statement is declared effective. Pursuant to the Selling Agent Agreement, the Company will appoint the Agents, which are expected to be the same agents as those acting as such under the selling agent agreement, dated May 10, 2019, filed as exhibit (H)(1) to Post-Effective Amendment No. 29 to the Company’s Registration Statement on Form N-2 (File No. 333- 227124), for the purpose of soliciting offers to purchase the Notes. The Notes will be offered for sale on a weekly basis, with the offering typically commencing on a Monday followed by a trade date the following Monday, upon which date the next offering of Notes will typically commence, and a closing date the following Thursday. The Company will determine the pricing-related terms of the Notes, including interest type, interest rate, redemption information and maturity date, on a weekly basis, which terms will be included in a pricing supplement to be filed on the Monday on which the offering as to such Notes commences. The Agents will use their reasonable best efforts to solicit offers to purchase Notes. Following the solicitation of these offers, on the date of each weekly close and based on the purchase indications received by the Agents during the weekly offering period, the Purchasing Agent will purchase Notes from the Company and such Notes will be concurrently resold to investors through the Purchasing Agent, the Named Agents and a network of other dealers and agents who are broker-dealers and securities firms with whom the Agents have a relationship. In this regard, the proposed offering is similar to a typical continuous offering of common stock, but for the difference in closing mechanics. Rather than accept subscriptions for shares and close periodically, the Agents will collect orders on an ongoing basis and, through the Purchasing Agent, will purchase the amount of Notes for which they’ve received orders. Despite the difference in closing mechanics, the Agents, on behalf of the Company, will continuously offer Notes and investors will be able to submit orders on an ongoing basis. The Company and the Agents intend to continue offering Notes on a continuous basis until such date as the Selling Agent Agreement terminates or the aggregate dollar amount of Notes has been sold. The Company will file the necessary post-effective amendments to the Registration Statement to ensure that the financial statements to be included in the Prospectus comply with Section 10(a)(3) of the Securities Act. Additionally, to facilitate the continuous offering of the Notes, the Company will periodically supplement the Prospectus to ensure that Company disclosure is complete and current on a continuous basis.

2

Further, the Company submits that it intends to omit certain pricing-related information from the Prospectus at the time it is declared effective in reliance on Rule 430A.  As described above, the pricing information for each weekly offering will depend upon the purchase indications received by the Agents during the weekly offering period and, as such, such information and certain other information that is dependent upon the offering price will be communicated to investors through a pricing supplement filed prior to the close of the offering. The Company expects that the information so omitted from the Prospectus at the time it is declared effective in reliance on Rule 430A and communicated to investors through a pricing supplement filed prior to the close of each weekly offering will include the public offering price, underwriting syndicate (including any material relationships between the registrant and underwriters not named therein), underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds, conversion rates, call prices and other items dependent upon the offering price, delivery dates and terms of the Notes dependent upon the offering date.  Additionally, the Company notes that it has furnished the undertaking required by Item 34.4 of Form N-2 in connection with a prospectus declared effective in reliance on Rule 430A.

*    *    *    *    *

3

  If you have any questions, please contact me at (416) 777-4727 or Michael Hoffman at (212) 735-3406.

Sincerely,

/s/ Steven Grigoriou
Steven Grigoriou

4

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October 30, 2018

VIA EDGAR

Jay Williamson, Attorney Adviser

United States Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

 Registration Statement (File No. 333-227124) of

Prospect Capital Corporation (the "Fund")

Dear Mr. Williamson:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Fund hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on October 30, 2018 so that it may become effective by 4:05 p.m. (New York time) on October 31, 2018 or as soon thereafter as practicable.

The Fund hereby requests that you notify Steven Grigoriou (416-777-4727) or Michael K. Hoffman (212-735-3406) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Kristin V. Dask_________________

Name: Kristin V. Dask

Title: Chief Financial Officer, Chief Compliance Officer,

         Treasurer and Secretary

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 29, 2018

VIA EDGAR

Jay Williamson, Attorney Adviser

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE:    Registration Statement (333-227124) of

Prospect Capital Corporation (the “Fund”)

Dear Mr. Williamson:

We are in receipt of oral comments provided by you on October 26, 2018 regarding Pre-Effective Amendment No. 1 to the Fund’s Registration Statement on Form N-2 (the “Amendment”).

The Fund has considered your comments and has authorized us to make on its behalf the responses discussed below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

Disclosure Comments:

1.

 We note the Fund’s response to comment 11 (“Prior Response 11”) in the prior response letter, dated October 23, 2018, relating to the presentation of certain portfolio metrics. We believe the draft disclosure places too much emphasis on the formula, and places insufficient emphasis on what the calculation is, how the calculation is used and what its potential limitations are. For example, it is unclear why “Weighted Average Portfolio Net Leverage” does not include all portfolio company leverage, why the Fund has chosen to calculate the metric the way it has and what sort of limitations or risks might be associated with the Fund’s calculation. Please revise or advise, as appropriate.

The Fund will include the requested disclosure, as applicable, in future filings. Please see below draft disclosure as it relates to the Fund’s Form 8-K filed on August 30, 2018.

Weighted Average Portfolio Net Leverage (“Portfolio Net Leverage”) and Weighted Average Portfolio EBITDA (“Portfolio EBITDA”) provide clarity into the underlying capital structure of the Fund’s portfolio debt investments and the likelihood that the Fund’s overall portfolio will be able to make interest payments and repay principal.

Portfolio Net Leverage generally reflects the net leverage of each of the Fund’s portfolio company debt investments, weighted based on the current fair market value of such investments. The net leverage for each portfolio company is calculated based on the Fund’s investment in the capital structure of such portfolio company, with a maximum limit of 10.0x adjusted EBITDA. This calculation excludes debt subordinate to the Fund’s position within the capital structure because the Fund’s exposure to interest payment and principal repayment risk is limited beyond that point. Additionally, structured credit residual interests and equity investments, for which principal repayment is not assured, are also not included in the calculation. The calculation does not exceed 10.0x adjusted EBITDA for any individual investment because 10.0x inherently captures the highest level of risk to the Fund. Portfolio Net Leverage provides the Fund with some guidance as to the Fund’s exposure to the interest payment and principal repayment risk of its overall debt portfolio.  The Fund monitors its Portfolio Net Leverage on a quarterly basis.

Portfolio EBITDA is generally used by the Fund to supplement Portfolio Net Leverage and generally indicates a portfolio company’s ability to make interest payments and/or repay principal.  Portfolio EBITDA is calculated using the weighted average dollar amount EBITDA of each of the Fund’s portfolio company debt investments.  The calculation provides the Fund with insight into profitability and scale of the portfolio companies within the Fund’s overall debt investments.

These calculations include addbacks that are typically negotiated and documented in the applicable investment documents, including but not limited to transaction costs, share-based compensation, management fees, foreign currency translation adjustments and other nonrecurring transaction expenses.

Together, Portfolio Net Leverage and Portfolio EBITDA assist the Fund in assessing the likelihood that the Fund will receive interest and principal payments.  However, these calculations are not meant to substitute an analysis of the Fund’s underlying portfolio company debt investments, but to supplement such analysis.

2.

 We note Prior Response 11. Please tell us supplementally what the Fund means by the reference to “a maximum limit of 10.0x adjusted EBITDA.”

The Fund advises the Staff to see the above response.

3.

 We note Prior Response 11. Please clarify the Fund’s disclosure to indicate what period the Fund used for the EBITDA calculation. For example, trailing twelve months, projected EBITDA, etc.

The Fund used trailing twelve months for the EBITDA calculation.

*    *    *    *    *

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (416) 777-4727 or Michael K. Hoffman at (212) 735-3406.

Sincerely,

/s/ Steven Grigoriou

Steven Grigoriou

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 23, 2018

VIA EDGAR

Jay Williamson, Attorney Adviser

Kenneth Ellington, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE: Registration Statement (333-227124) of

Prospect Capital Corporation (the “Fund”)

Dear Messrs. Williamson and Ellington:

We are in receipt of oral comments provided by you on September 27, 2018 and September 26, 2018, respectively, regarding the Fund’s Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 1 (the “Amendment”) to the Registration Statement, which is being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

Accounting Comments:

1.

 In the Fees and Expenses section, please round all dollar figures to the nearest dollar, as required by General Instruction 3 to Item 3 of Form N-2.

The Fund has revised the disclosure in accordance with the comment.

2.

 In the Portfolio Companies table, please disclose the address of each portfolio company in which the Fund is investing, as required by Item 8.6.a.(1) of Form N-2.

The Fund has revised the disclosure in accordance with the comment.

3.

 In footnote 1 to the Portfolio Companies table, please consider disclosing the percentage of total assets that are non-qualifying assets.

The Fund has revised the disclosure in accordance with the comment.

4.

 In the Fund’s Consolidated Schedules of Investments, we note that the fair value of Credit Central Loan Company, LLC (“Credit Central”), Class A Units, increased by approximately 104% in the six-month period between June 30, 2017 and December 31, 2017. Please supplementally explain the rationale for such increase.

The fair value of the Class A units increased during the six months ending December 31, 2017 due to higher trading multiples of comparable companies in the consumer finance industry and an increase in Credit Central’s profitability, which was driven by lower levels of defaulted loans, for which management does not expect to receive payment, and provisions for loan losses.

5.

 In the Fund’s Consolidated Schedules of Investments, we note that Valley Electric Company, Inc., Common Stock, had a fair value of zero as of September 30, 2017 and a fair value of approximately $12.6 million as of June 30, 2018. Please supplementally explain the rationale for such increase.

As also described on page 62 of the Registration Statement, in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section, the fair value increase was primarily the result of increased demand for specialty electrical services, which resulted in an increase in revenues, and higher project margins.

6.

 In the Fund’s Consolidated Schedules of Investments, please ensure that all disclosure relating to restricted securities that is required by footnote 8 of Rule 12-12 of Regulation S-X, including acquisition date, is included in the Fund’s future financial statements.

The Fund will ensure that all such disclosure will be included, if applicable, going forward.

7.

 In Note 4 (Revolving Credit Facility) to the Fund’s Consolidated Financial Statements, please disclose average dollar amount of borrowings and the average interest rate, as required by Rule 6-07.3 of Regulation S-X and ASC 946, Financial Services-Investment Companies, Subtopic 225.

The Fund will revise the disclosure in future financial statement filings in accordance with the comment.

8.

 In Note 12 (Income Taxes) to the Fund’s Consolidated Financial Statements, please disclose in future filings the net unrealized appreciation or depreciation, as required by Rule 6-03(h)(2)(iii) of Regulation S-X.

The Fund will revise the disclosure in future financial statement filings in accordance with the comment.

9.

 We note that a number of the Fund’s wholly-owned and substantially wholly-owned subsidiaries are not consolidated. Please supplementally explain the rationale as to why each such subsidiary is not consolidated.

In accordance with Regulation S-X and the AICPA Audit and Accounting Guide for Investment Companies and ASC 810-Consolidation, the Fund generally will not consolidate its interest in any company other than in investment company subsidiaries and controlled operating companies substantially all of whose business consists of providing services to the Fund. The Fund has reviewed the October 2014 IM Guidance Update, “Investment Company Consolidation,” and in reaching the foregoing conclusions the Fund took the guidance into account.

Arctic Energy Services, LLC (“AES”) provides oilfield service personnel, well testing flowback equipment, frac support systems and other services to exploration and development companies in the Rocky Mountains.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  AES is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

CCPI Inc. (“CCPI”) is a manufacturer of temperature measurement solutions and refractory materials for the aerospace, aluminum, automotive, heat treatment, steel, and other industries with operations in Blanchester, Ohio.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CCPI is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

CP Energy Services Inc. (“CPES”) provides oilfield flowback services and fluid hauling and disposal services in Texas and Oklahoma through its subsidiaries.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CPES is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Credit Central Loan Company, LLC (“CCLC”) is a branch-based provider of installment loans with operations in South Carolina, Tennessee and Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CCLC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Echelon Transportation LLC (“ETL”) is an aircraft leasing company with operations in New York, New York.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  ETL is also excluded from the definition of investment company under FASB ASC

946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Edmentum Ultimate Holdings, LLC (“EUH”) owns 100% of the equity of Edmentum, Inc., which is an all subscription based software and service provider of online curriculum and assessments to the U.S. education market with operations in Minneapolis, Minnesota.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  EUH is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

First Tower Finance Company LLC (“FTFC”) owns 100% of First Tower, LLC, a multiline specialty finance company.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  FTFC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Freedom Marine Solutions, LLC (“FMS”) owns, manages and operates offshore supply vessels that serve the oil and gas industry in the Gulf of Mexico. Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  FMS is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

SB Forging Company II, Inc. (f/k/a Gulf Coast Machine & Supply Company) (“SBFC”) is a provider of value-added forging solutions to energy and industrial end markets with operations in Beaumont, Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  SBFC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Harbortouch Payments, LLC (“HPL”) is a provider of transaction processing services and point-of sale equipment used by merchants across the United States with operations in Allentown, Pennsylvania.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  HPL is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

InterDent, Inc. (“IDT”) is a dental practice support organization based in Inglewood, California providing administrative, operational, marketing and other services to affiliated dental practices.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  IDT is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

MITY, Inc. (“MITY”) is a designer, manufacturer and seller of multipurpose room furniture and specialty healthcare seating products with operations in Orem, Utah.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  MITY is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform

investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

National Property REIT Corp. (“NPRC”) is a qualified REIT that holds for investment, operates, finances, leases, manages, and sells a portfolio of real estate assets, including, but not limited to, industrial, commercial, and multi-family properties located in the Southeastern United States, Michigan and Texas, and engages in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. Additionally, through its wholly-owned subsidiaries, NPRC invests in online consumer loans.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  NPRC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Nationwide Loan Company LLC (f/k/a Nationwide Acceptance LLC) (“NLC”) is an automobile and consumer loan finance company with operations in Cicero, Illinois.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  NLC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

NMMB, Inc. (“NMMB”) is an advertising media buying business with operations in New York, New York.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  NMMB is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Pacific World Corporation (“PWC”) is a supplier of nail and beauty care products to food, drug, and value retail channels worldwide, and is based in Aliso Viejo, California.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  PWC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

R-V Industries, Inc. (“RVI”) is an engineering and manufacturing company servicing industrial customers with operations in Honey Brook, Pennsylvania.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  RVI is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

USES Corp. (“USES”) provides industrial, environmental, and maritime services in the Gulf States region and is based in Houston, Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  USES is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Valley Electric Company, Inc. (“VEC”) owns 100% of the equity of VE Company, Inc., which owns 100% of the equity of Valley Electric Co. of Mt. Vernon, Inc., a leading provider of specialty electrical

services in the state of Washington and among the top 50 electrical contractors in the United States.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  VEC is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services. Its principal business purpose and activities include making investments for strategic operating purposes.

Wolf Energy, LLC (“WEL”) owns and operates producing oil and gas assets in Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  WEL is also excluded from the definition of investment company under FASB ASC 946-10-15 because it does not perform investment management services

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

August 31, 2018

Jay Williamson, Senior Counsel

Division of Investment Management

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

RE:

 Prospect Capital Corporation

Dear Mr. Williamson:

On August 30, 2018, Prospect Capital Corporation (the "Company") filed a Registration Statement on Form N-2 (File No. 333-[       ]) (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to Rule 415(a)(6) of the Securities Act, the Registration Statement, upon effectiveness, is intended to replace the Company's current shelf registration statement (File No. 333-213391) (the "Current Shelf").

The Company represents that the Registration Statement is substantially similar to its reviewable Post-Effective Amendment No. 50, filed October 26, 2017 and declared effective on October 30, 2017 (the “Amendment”), to the Current Shelf and that the only substantive changes made in the Registration Statement to the disclosure contained in the Amendment are as follows:

◦

 Financial statements and the notes thereto, the MD&A, dividends declared by the Company, selected financial data, price range of common stock and other related updates were included in the base prospectus (as of the Company's fiscal year end June 30, 2018).

◦

 The Risk Factors section was updated to reflect certain factual updates related to the Company, current regulatory conditions and current market conditions.

◦

 The Sales of Common Stock Below Net Asset Value section was revised to show the current status of the ability of the Company, including with respect to any required approval by its shareholders, to issue shares below net asset value.  The section is substantively similar to the corresponding section in the Amendment.

◦

 The Business section was revised to show current information about the Company’s investments.

◦

 The Management section was revised to show current information and updates about the Company's Directors and Officers.

◦

 Compensation paid to Directors and Officers was updated.

◦

 Fees paid to the Company's investment adviser and its administrator were updated.

◦

 The Portfolio Companies chart was revised to show information as of June 30, 2018.

◦

 The tax disclosure was revised slightly.

◦

 Other minor factual updates.

As such, the Company hereby requests expedited review of its Registration Statement.  If you have any questions, please contact me at (416) 777-4727 or Michael Hoffman at (212) 735-3406.

Sincerely,

/s/ Steven Grigoriou
Steven Grigoriou

2

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 26, 2017

VIA EDGAR

Jay Williamson, Attorney Adviser

Sheila Stout, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-213391) of
Prospect Capital Corporation (the “Fund”)

Dear Mr. Williamson and Ms. Stout:

We are in receipt of oral comments provided by each of you on October 24, 2017 regarding the Fund’s Post-Effective Amendment No. 48 (the “POS 8C”) to its Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the POS 8C discussed below.  These changes are reflected in Post-Effective Amendment No. 50 (the “Amendment”) to the Fund’s Registration Statement being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

1

Mr. Williamson

Ms. Stout

October 26, 2017

Page 2

Accounting Comments:

1.    On page 46 of the Registration Statement, there is a word missing in the following sentence.  “Our annualized current yield on [   ] was 10.4% and 12.0% as of June 30, 2017 and June 30, 2016, respectively, across all investments.”  Please revise disclosure as applicable.

The Fund revised disclosure in accordance with the comment.  The sentence now reads, “Our annualized current yield on was 10.4% and 12.0% as of June 30, 2017 and June 30, 2016, respectively, across all investments.”

2.    The Fund’s response 3 in the prior response letter, dated October 20, 2017 (the “Prior Response Letter”), indicates that several of the Fund’s loans are subject to intercreditor agreements.  Please clarify.

A number of the Fund's outstanding loans are subject to an intercreditor agreement.  Depending on the intercreditor structure and market convention, an intercreditor agreement may (1) subordinate liens held by a junior lender to the liens held by a senior lender and/or (2) subject to satisfaction of certain conditions and triggering events, subordinate payment of debt obligations owed to a junior lender in favor of prior payment in full of debt obligations owed to a senior lender.  In addition, senior lenders would typically control:  (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement.  However, depending on the intercreditor structure, market convention and the circumstances, such rights may be granted to different groups of lenders.  Under the Fund's intercreditor agreements and in accordance with terms typical for such intercreditor structures, in some transactions the Fund retains control of the aforementioned actions and in others it does not.  In the event that the Fund’s junior liens or debt obligations are subordinated to the senior lenders and the Fund cedes such control to such senior lenders under the Fund’s intercreditor agreements in accordance with terms typical for such subordinated intercreditor structures, the Fund, as a junior lender, may be unable to realize all or a portion of the proceeds of the collateral securing some of its loans.   The Fund believes that the risks regarding such intercreditor agreements are appropriately detailed in the risk factor, "Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies."  Loans in which the Fund is subject to payment or lien subordination account for approximately 19% of the Fund's total assets as of June 30, 2017.

The valuation of loans subject to an intercreditor agreement are similar to the valuation of "first out/last out" structures discussed in response 3 in the Prior Response Letter.  Such

2

Mr. Williamson

Ms. Stout

October 26, 2017

Page 3

loans are valued primarily on the income method while taking into account other relevant factors such as the seniority of each tranche relative to the Fund’s capital structure, implied leverage at each tranche and other key terms as defined in the applicable credit agreement in determining the discount rate to apply to each loan’s expected cash flows.

3.    The staff notes that ASC 835 provides examples of reporting issue costs in the balance sheet as a direct deduction from the face amount of the note and that amortization of debt issue costs should be reported as interest expense.  Accordingly, the staff reissues comment 7 in the Prior Response Letter.

The Fund will revise disclosure in accordance with the comment going forward to include the amount of unamortized deferred financing fees parenthetically.

Disclosure Comments:

4.    Please include in a risk factor that pre-incentive fee net investment income includes fees from controlled companies.

The Fund has revised disclosure in accordance with the comment and included the requested disclosure in the risk factor, “Potential conflicts of interest could impact our investment returns.”

5.    Please supplementally provide further detail regarding the Board of Directors’ considerations regarding the renewal of the Investment Advisory Agreement and the disclosure in the POS 8C.

Prior to and at an in-person board meeting, the Investment Adviser presented materials to the Board of Directors, including the independent Directors, in aid of the Board’s consideration whether to renew the Investment Advisory Agreement.  After its review of the materials, due deliberation and approval of the Investment Advisory Agreement at the in-person meeting, the Board ratified a disclosure for the POS 8C generally reflecting the information and factors the Board considered in reaching its renewal decision.

6.    The disclosure on page 129 regarding Section 851(b)(3)(A) of the Code is confusing.  Please update.

The Fund has revised disclosure in accordance with the comment.  The disclosure now reads, “at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or and do not represent

more than 10% of the outstanding voting securities of the issuer (which for these purposes includes the equity securities of a “qualified publicly traded partnership”);”

3

Mr. Williamson

Ms. Stout

October 26, 2017

Page 4

7.    Section 851(b)(3)(B) of the Code contains three separate tests.  Please confirm that the Fund met all three tests.

The Fund confirms that it met all three tests in Section 851(b)(3)(B) of the Code for the tax year ending August 31, 2017.

*    *    *    *    *

4

Mr. Williamson

Ms. Stout

October 26, 2017

Page 5

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (416) 777-4727.

Sincerely,

/s/ Richard Prins

Richard Prins

5

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 20, 2017

VIA EDGAR

Jay Williamson, Attorney Adviser

Sheila Stout, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-213391) of
Prospect Capital Corporation (the “Fund”)

Dear Mr. Williamson and Ms. Stout:

We are in receipt of oral comments provided by each of you on October 13, 2017 regarding the Fund’s Post-Effective Amendment No. 39 (the “POS 8C”) to its Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the POS 8C discussed below.  These changes are reflected in Post-Effective Amendment No. 48 (the “Amendment”) to the Fund’s Registration Statement being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.

Mr. Williamson

Ms. Stout

October 20, 2017

Page 2

Accounting Comments:

1.    Please be sure to include auditor consents in the Fund’s next Registration Statement filing.

The Fund has included the necessary auditor consents in its filing.

2.    In the section entitled Selected Condensed Financial Data, the weighted average yield on debt portfolio at year end excludes equity investments and non-performing loans.  Please also include the weighted average yield on the entire portfolio for each period.  Please also include such yield in other places in the document to be consistent.  For example, see page 46.

The requested disclosure has been added.

3.    In the risk factor, “Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies,” the Fund states that certain intercreditor agreements have “first out” and “last out” structures.  Please supplementally discuss the portion of your loans that have such structures and the accounting for such loans, including how they are fair valued.  If such loans are material, please consider including additional disclosure explaining the risk of such loans.

Several of the Fund’s outstanding loans are subject to intercreditor agreements that subordinate such loans to other debt (e.g., the Fund’s loan to a portfolio company may be subordinated to another loan issued by a third-party lender).  However, with a few exceptions, the Fund does not currently have any outstanding loans that employ an intercreditor agreement to establish a “first out / last out” structure within the same loan. Instead, such “first out / last out” structure is established in the applicable credit agreement, rather than by means of an intercreditor agreement.

Each of the Fund’s loans that employ a “first out / last out” structure, if performing, will be valued using the income approach. The valuation will take into account the seniority of each tranche relative to the Fund’s capital structure, implied leverage at each tranche and other key terms as defined in the applicable credit agreement in determining the discount rate to apply to each loan’s expected cash flows.

If the Fund’s investment in such loans becomes material in the future, the Fund will review its disclosure and revise it as necessary.

2

Mr. Williamson

Ms. Stout

October 20, 2017

Page 3

4.    In the section entitled “Senior Securities,” please supplementally explain why the disclosure regarding the total amount outstanding for the 2023 Notes does not match the disclosure in the audited financial statements.

The 2023 Notes were issued with an original issue discount.  Accordingly, the Senior Securities table shows the gross amount outstanding and the Fund included footnote 8 to the Senior Securities table stating that “the notes are presented net of unamortized discount.”

5.    Please supplementally discuss the reason for identifying the small business loan portfolio as a company less than 5% held as opposed to identifying it as controlled entity?

The Fund, through its consolidated, wholly-owned subsidiary Prospect Small Business Lending, LLC (“PSBL”), purchases small business whole loans on a recurring basis from online small business loan originators. These small business whole loans are debt investments only and are not serviced or controlled by the Fund or PSBL.  Accordingly, the Fund believes that it is appropriate to identify the small business loan portfolio as a company less than 5% held.

6.    Please confirm that the Fund has its fidelity bond and will file it as required by Rule 17g-1.

The Fund confirms that it has its fidelity bond and will file it as required by Rule 17g-1 once final documentation is received from the insurance provider.

7.    Please note that debt issuance costs for liabilities should be included on the face of the consolidated statements of assets and liabilities.  Please see ASU-2015-03. The ASU specifies that “issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note” and that “[a]mortization of debt issue costs shall also be reported as interest expense.”

In accordance with ASU-2015-03, the Fund has presented these costs, except those incurred by the Revolving Credit Facility, as a direct deduction to the Fund’s Unsecured Notes. A reconciliation of deferred financing fees for each debt position is presented in detail in Note 8 to its audited financial statements, and reference is made to Note 8 to its audited financial statements. Lacking specific guidance to parenthetically disclose costs on the financial statements, industry practice more commonly discloses deferred financing costs in the footnotes. The Fund believes that its presentation and level of detail is sufficiently useful to the readers of the financials.

3

Mr. Williamson

Ms. Stout

October 20, 2017

Page 4

8.    Please supplementally discuss the primary reason for the decline in “other income” from 2016 to 2017.

The decline is primarily due to the $12.9 million of advisory fee income recognized with the sale of Harbortouch Payments, LLC in May 2016, which was partially offset by an increase in other structuring and amendment fees generated by 2017 originations.

9.    Please supplementally discuss the reason for a negative balance for excise tax.

The negative balance for excise tax is due to a decline in previously estimated taxable income from structured credit investments (which are treated as controlled foreign corporations for U.S. tax purposes) and the shareholder dividend payout requirements.

During portions of calendar years 2015 and 2016, the broadly syndicated loan market sold off significantly, and the independent management teams of most of the Fund’s structured credit investments took advantage of the volatility in the loan market to both sell certain loans and purchase new loans at discounted prices. While the sales and purchases of such loans at similarly discounted prices did not have an economic impact on the Fund’s net investment income for financial statement purposes, the sales of underlying loans at discounted prices resulted in the immediate recognition of taxable losses, but corresponding purchases at discounted prices do not generate immediate recognition of taxable income.

Realized gains and losses on underlying individual loans within the Fund’s structured credit investments are recognized as taxable events when calculating the Fund’s allocable portion of a structured credit investment’s taxable income, and losses on sales of such assets reduce the Fund’s taxable income. Unfortunately, the required tax reporting for these investments (PFIC Annual Information Statement or Form 5471) which are prepared and distributed by respective independent management teams can be delayed as long as nine months after the tax year end of the structured credit investment.  As a result of this delay in tax reporting, the Fund’s taxable income estimates did not properly capture the magnitude of the losses within the structured credit investments and the Fund over accrued excise tax for the period.

10.    For controlled investments, please supplementally discuss the primary reason for an increase in unrealized gains.

Net unrealized gains for controlled investments increased by $86.8 million during the year ended June 30, 2017. This increase was primarily the result of the following: (1) $104.2 million unrealized gains in the Fund’s REITs portfolio due to improvement operating performance at the property-level; and (2) the sale of Gulfco assets for which the Fund recognized a realized loss of $66.1 million, of which $53.1 million had been previously

4

Mr. Williamson

Ms. Stout

October 20, 2017

Page 5

recorded as an unrealized loss as of June 30, 2016. These increases were partially offset by declines in value related to the following: (i) USES and Arctic Energy declined in value by $30.2 million and $21.0 million, respectively, due to energy-related factors as well as a decline in operating performance; and (ii) $23.8 million of unrealized losses in the Fund’s REITs online lending portfolio due to an increase in delinquent loans.

11.    In the Fund’s Consolidated Schedule of Investments, please disclose the rate on preferred stock owned by the Fund if applicable.

The Fund will disclose the rate on preferred stock owned by it if applicable going forward.

12.    The statement on page F-62 of the Fund’s audited financials states that the 2016 financials were unaudited.  It seems that the audited financials were in fact included.  Please revise disclosure accordingly going forward.

The Fund will revise disclosure in accordance with the comment going forward.

13.    It seems that First Tower triggered 4-08(g), but the Fund included 3-09 disclosure.  Please discuss why the Fund included 3-09 disclosure instead of 4-08(g) disclosure.

Pursuant to Section 3-09 of Regulation S-X and Section 2405.3 of the Division of Corporate Finance Financial Reporting Manual, if First Tower meets the Section 3-09 text within the past three years, Section 3-09 disclosure is required for each year of the past three years.  The Fund believes that including Section 4-08(g) disclosure in addition to the Section 3-09 disclosure would be redundant and would not assist investors in reviewing the Fund’s financial statements.

14.    On page F-147, in the National Property REIT Corp. financials, it states that NPRC sold 21,926 unsecured loans.  Please supplementally discuss the sale of these loans.

Page F-147 states the following: “On June 22, 2017, the Company sold 21,926 of our unsecured consumer loans (with a cost of $151,472,877 and accrued interest of $1,731,129) purchased from LendingClub to LendingClub Operated Aggregator Note (LOAN) NP I, LLC (“CLUB 2017-NP1”) for proceeds of $124,528,245 net of related transaction expenses, and a trust certificate with a fair value of $30,469,823 representing a 42.71% interest in the CLUB 2017-NP1. The Company realized a gain of $1,794,051 on the sale.” This sale was part of a series of transactions to securitize the near prime unsecured consumer loans purchased from Lending Club. NPRC was one of four contributors to the securitization entity.

5

Mr. Williamson

Ms. Stout

October 20, 2017

Page 6

15.    Please supplementally discuss the collectability of First Tower’s receivables, including the percentage of loans carried over from 2016, 2015 and 2014.

First Tower is a controlled portfolio investment company and is not a consolidated entity. The Fund expects that all receivables are collectible except to the extent an allowance has been established. First Tower is audited on an annual basis by an independent third-party engaged by First Tower’s management. First Tower’s loans have an average term length in excess of two years, which contributes to the occurrence of loans carried over from year to year.

16.    In the Fund’s Consolidated Schedule of Investments, we note that the First Tower PIK interest rate decreased from 12% to 7%.  Please supplementally discuss refinancing and how First Tower was fair valued, including the discount rate used.

The Fund amended First Tower’s PIK interest rate downward from 12% to 7% effective January 3, 2017. The Fund uses the market multiple approach and discounted cash flow approach to value First Tower and there was no change to the valuation methodology used as a result of the change made to the PIK interest rate. The loan remained valued at par. The valuation impact of the refinancing was to the Fund’s equity investment in First Tower.

Disclosure Comments:

17.    On page 3 of the prospectus, please restore prior disclosure regarding the securities being “junk.”  Further, if material, please disclose that the Fund’s CLO investments are primarily in the equity tranche.

The Fund has revised disclosure in accordance with the comment.

18.    Portions of your disclosure contain repeat disclosure contained elsewhere in your prospectus. Please review the prospectus and revise as necessary to eliminate unnecessarily duplicative disclosures.  Specifically, please see pages 89-92.

The Fund has revised disclosure in accordance with the comment.

19.    In order for investors to better understand the organizational structure of the Fund, please consider providing a graphical representation of the Fund’s corporate structure in the Prospectus Summary section.

Unlike other business development companies that use multiple subsidiaries to issue various forms of senior securities, the Fund does not have a complicated corporate structure.  The Fund formed a wholly-owned subsidiary, Prospect Capital Funding LLC (“PCF”), a

6

Mr. Williamson

Ms. Stout

October 20, 2017

Page 7

Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of its portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly-owned subsidiary PSBL purchases small business whole loans on a recurring basis from online small business loan originators. Prospect Yield Corporation, LLC (“PYC”) holds the Fund’s investments in collateralized loan obligations. Each of these subsidiaries have been consolidated since operations commenced. Additionally, the Fund consolidates 17 wholly-owned and substantially wholly-owned holding companies formed by the Fund in order to facilitate its investment strategy.  All of the Fund’s unsecured debt is held at the Fund and the Fund’s revolving credit facility is held at PCF. Accordingly, the Fund does not believe that the inclusion of such a graphical representation is necessary.

20.    In the Fees and Expense table, as per the disclosure on page 128, please include $15 in the line item and the following additional information regarding the DRIP in the footnote: The expenses of the dividend reinvestment plan are included in “other expenses.” The plan administrator’s fees will be paid by us. There will be no brokerage charges or other charges to stockholders who participate in the plan except that, if a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15 transaction fee plus a $0.10 per share brokerage commissions from the proceeds. For additional information, see “Dividend Reinvestment and Direct Stock Purchase Plan.” See instruction 4 to Item 3 of Form N-2.

The Fund has revised disclosure in accordance with the comment.

21.    Please supplementally discuss whether pre-incentive fee net investment income includes fees from con

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

August 30, 2017

Jay Williamson, Senior Counsel

Division of Investment Management

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

RE:

 Prospect Capital Corporation

Dear Mr. Williamson:

On August 30, 2017, Prospect Capital Corporation (the "Company") filed a reviewable post-effective amendment (the "Amendment") to the Registration Statement on Form N-2 (File No. 333-213391) (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). When declared effective pursuant to Section 8(c) of the Securities Act, the Amendment is intended to update the Registration Statement.

The Company represents that the Amendment is substantially similar to its Pre-Effective Amendment No. 2, filed November 1, 2016 and declared effective on November 3, 2016, to the Registration Statement and that the only substantive changes made to the disclosure contained in the Amendment are as follows:

◦

 Financial statements and the notes thereto, the MD&A, dividends declared by the Company, selected financial data, price range of common stock and other related updates were included in the base prospectus (as of the Company's fiscal year end June 30, 2017).

◦

 The Risk Factors section was updated to reflect certain factual updates related to the Company, current regulatory conditions and current market conditions.

◦

 The Sales of Common Stock Below Net Asset Value section was revised to show the current ability of the Company, as approved by its shareholders, to

issue shares below net asset value.  The section is substantively similar to the corresponding section in the Company’s current shelf registration statement.

◦

 The Business section was revised to show current information about the Company’s investments.

◦

 The Management section was revised to show current information about the Company's Directors and Officers.

◦

 Compensation paid to Directors and Officers was updated.

◦

 Fees paid to the Company's investment adviser and its administrator were updated.

◦

 The Portfolio Companies chart was revised to show information as of June 30, 2017.

◦

 The tax disclosure was revised slightly.

◦

 Other minor factual updates.

As such, the Company hereby requests expedited review of its Registration Statement.  If you have any questions, please contact me at (416) 777-4727 or Richard Prins at (212) 735-2790.

Sincerely,

/s/ Steven Grigoriou
Steven Grigoriou

2

1495658-NYCSR03A - MSW

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

November 2, 2016

VIA EDGAR

Asen Parachkevov, Attorney Adviser

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-213391) of

Prospect Capital Corporation (the “Fund”)

Dear Mr. Parachkevov :

We are in receipt of oral comments provided by you on November 2, 2016 regarding the Fund’s Registration Statement on Form N-2 (the “Registration Statement”).   The Fund has considered your comments and has authorized us to make on its behalf the responses discussed below.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Registration Statement.

Mr. Asen Parachkevov

November 2, 2016

Page 2

1.

 With respect to NPRC, on a consolidated basis, how much of its assets are in consumer loans?

On a consolidated basis, 36% of NPRC’s consolidated total assets on a GAAP basis are in consumer loans as of June 30, 2016.

2.

 With respect to NPRC, what is the percentage of net income for fiscal year 2016 that is based on consumer loans relative to real estate?

For fiscal year 2016, while NPRC reported a net loss, 40% of NPRC’s consolidated total revenue on a GAAP basis was based on consumer loans for the year ended June 30, 2016.

*         *         *         *         *

2

Mr. Asen Parachkevov

November 2, 2016

Page 3

If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (416) 777-4727.

Sincerely,

/s/ Richard Prins

Richard Prins

3

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November 1, 2016

VIA EDGAR

Asen Parachkevov, Attorney Adviser

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

 Registration Statement (File No. 333-213390) of Prospect Capital Corporation (the "Fund")

Dear Mr. Parachkevov:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Fund hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on November 1, 2016 so that it may become effective by 4:05 p.m. (New York time) on November 3, 2016 or as soon thereafter as practicable.

The Fund hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Brian H. Oswald_________________

Name: Brian H. Oswald

Title: Chief Financial Officer, Chief Compliance Officer,

         Treasurer and Secretary

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[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

November 1, 2016

VIA EDGAR

Asen Parachkevov, Attorney Adviser

Jeff Long, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-213391) of

Prospect Capital Corporation (the “Fund”)

Dear Mr. Parachkevov and Mr. Long:

We are in receipt of oral comments provided by each of you on October 31, 2016 regarding the Fund’s Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the Fund’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 2 to the Fund’s Registration Statement being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Registration Statement.

Mr. Asen Parachkevov

Mr. Long

November 1, 2016

Page 2

1.

 With respect to Prospect Finance Corporation, LLC's ("PFC") subsidiaries, please supplementally provide additional detail regarding how such subsidiaries gather information to determine that such loans, including refinancings, are Sections 3(c)(5)(A) and (B) compliant loans.

The staff of the Division of Investment Management (the "IM Staff") of the Commission has issued numerous no-action letters that identify the types of loans and receivables that would fall within the exception under Sections 3(c)(5)(A) and (B).  The IM Staff has not recommended enforcement to the Commission for loans and refinancing arrangements where there is a meaningful connection-a nexus-between loans being refinanced, and the original, underlying merchandise that was purchased or acquired with the proceeds of those loans.

The PFC subsidiaries have access to each borrower's application data for a loan or refinancing, which states the borrower's intended use of proceeds for the loan.  The Fund uses this information to determine whether the loans or refinancings in question are sufficiently tied to specific merchandise, services or insurance in a manner consistent with Section 3(c)(5)(A) or (B).  For loans, only loans that are used by borrowers to purchase specific merchandise, services or insurance are considered qualifying loans for Section 3(c)(5)(A) or (B) purposes.  For refinancings, only loans that are used by borrowers to refinance debt that was originally borrowed to allow the borrower to purchase specific services, merchandise or insurance are considered qualifying loans for Section 3(c)(5)(A) or (B) purposes.  Accordingly, the Fund believes that the loans and refinancings are sufficiently tied to specific merchandise, services or insurance in a manner consistent with Section 3(c)(5)(A) or (B).

2.

 Please confirm that the value of the “taxable REIT subsidiary” (“TRS”) shares and non-conforming assets is less than 25% of the value of NPRC.

The Fund confirms that the value of the TRS shares and non-conforming assets is less than 25% of the value of NPRC.

3.

 Please provide additional details regarding "net operating income interests."  Are they separate contracts?  Has the Fund entered into additional contracts?  Why has the value increased dramatically since 2014?  Where can we find their accounting in NPRC's financials?

Net operating income interests are not separate contracts and are included in the Fund’s credit agreement with NPRC. The credit agreement stipulates a 5% interest payment to the Fund based on the net operating income produced by the properties owned by NPRC. These interests are settled in cash on a quarterly basis. The increase in fair value of the net operating income interest is directly related to the growth of the NPRC real estate portfolio because the calculation is based on the total net operating income for the portfolio. NPRC has acquired over half of its current real estate portfolio in the last three years (2014-2016). Additionally, improved performance and increased efficiencies at the

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properties have caused net operating income to improve throughout the portfolio. The fair value of the net operating income interest reduces the fair value of the Fund’s common equity investment in NPRC by the same amount. NPRC records the net operating income interest as interest expense and is included in the interest expense line item on NPRC’s Combined Consolidated Statement of Operations. Theses interests are also separately disclosed as a related party transaction within the footnotes to NPRC’s Combined Consolidated Financial Statements.

*         *         *         *         *

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If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (416) 777-4727.

Sincerely,

/s/ Richard Prins

Richard Prins

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		Document

[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 19, 2016

VIA EDGAR

Asen Parachkevov, Attorney Adviser

Jeff Long, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-213391) of

Prospect Capital Corporation (the “Fund”)

Dear Mr. Parachkevov and Mr. Long:

We are in receipt of oral comments provided by each of you on October 3, 2016 regarding the Fund’s Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the Fund’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 1 to the Fund’s Registration Statement being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.  Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Registration Statement.

Mr. Asen Parachkevov

Mr. Long

October 19, 2016

Page 2

National Property REIT Corp. (“NPRC”)

1.

 Please provide the analysis as to how NPRC is eligible for an exclusion from investment company status under the Investment Company Act of 1940 (the “1940 Act”) pursuant to Section 3(c)(5)(C).

NPRC does not rely on the Section 3(c)(5)(C) exception under the 1940 Act, which is for real estate mortgage companies and is not designed to apply to real estate operating companies or holding companies.  NPRC is not an “investment company” as defined in Section 3(a) of the 1940 Act.  An “investment company” is generally defined under sections 3(a)(1)(A) and (C) of the 1940 Act as a company that either:

•

 is or holds itself out as being primarily engaged, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

•

 is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”).1

NPRC is and holds itself out as being primarily engaged, through its direct and indirect subsidiaries, in the business of purchasing and managing real properties.  NPRC is not and does not propose to engage in the business of investing, reinvesting or trading in securities. As such, NPRC is not an “orthodox” investment company that falls within the scope of Section 3(a)(1)(A) of the 1940 Act. Likewise, NPRC’s holdings in “investment securities” do not exceed 40% of its total assets on an unconsolidated basis. As such, NPRC is not an investment company that falls within the scope of Section 3(a)(1)(C) of the 1940 Act. A more detailed analysis in support of our conclusion regarding Section 3(a)(1)(C) follows.

A. Section 3(a)(1)(C)

NPRC’s holdings in “investment securities” do not exceed 40% of its total assets on an unconsolidated basis. As such, NPRC is not an investment company that falls within the scope of Section 3(a)(1)(C) of the 1940 Act.

Section 3(a)(1)(C) of the 1940 Act defines an investment company as “any issuer which . . . is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer’s total

1 Section 3(a)(1)(B) of the 1940 Act also defines an “investment company” as an issuer that is engaged or proposes to engage in the business of issuing face-amount securities of the installment type or has been engaged in such business and has any such certificate outstanding. NPRC is not engaged, and does not propose to engage, in the business of issuing face-amount securities of the installment type. Nor does NPRC have any such certificates outstanding.

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assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.” An “investment security” is defined in section 3(a)(2) of the 1940 Act as “all securities except (A) U.S. government securities, (B) securities issued by employee securities companies, and (C) securities issued by majority-owned subsidiaries2 of the owner which (i) are not investment companies, and (ii) are not relying on the exception from the definition of investment company in sections 3(c)(1) or 3(c)(7) of the 1940 Act.”

Because the 40% test set forth in Section 3(a)(1)(C) is applied on an unconsolidated basis, in order to determine whether NPRC falls within the definition of a Section 3(a)(1)(C) investment company, it is necessary to perform a “bottom-up” entity-by-entity analysis of the NPRC structure to identify which of NPRC’s total assets constitute “investment securities.”

In total, NPRC has 15 direct subsidiaries that are primarily engaged in the business of purchasing and managing properties and one direct subsidiary that is primarily engaged in the business of  making or acquiring loans and other receivables that qualify under Section 3(c)(5)(A) or (B) of the 1940 Act.  Accordingly, none of those subsidiaries are investment companies.  NPRC also directly holds three real estate assets.  NPRC’s direct real estate holdings and 15 direct subsidiaries that are primarily engaged in the business of purchasing and managing properties represent approximately 64% of NPRC’s assets on an unconsolidated basis as of June 30, 2016.3

1.  Prospect Finance Company, LLC (“PFC”)

PFC is a subsidiary of NPRC that conducts a consumer online loan business.  PFC conducts its businesses primarily through subsidiaries in a manner that complies with the 40% test discussed above. The value of PFC’s investment securities, together with any securities issued by its wholly-owned or majority-owned subsidiaries excepted from the definition of investment company pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act (exclusive of U.S. government securities and cash items) represents less than 40% of value of PFC’s total assets on an unconsolidated basis.  PFC regularly monitors the value of its assets to ensure continuing and ongoing compliance with the 40% test.  In addition, the Fund believes that PFC is not considered an investment company under Section 3(a)(1)(A) of the 1940 Act because it is neither engaged primarily, nor holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities because PFC primarily engages, and will continue to engage, in the non-investment company businesses of its current and

2 A majority-owned subsidiary of a person is defined in section 2(a)(24) of the 1940 Act as a company 50% or more of whose outstanding voting securities are owned by such person.

3 The Fund also notes that Section 3(c)(5)(C) does not apply to NPRC’s real estate subsidiaries because fee ownership in real property is not included in Section 3(c)(5)(C) as good assets unless the entity holds so many investment securities that one has to bring in “mortgages and other interests in real property” to qualify under Section 3(c)(5)(C).  Controlling interests in subsidiaries that primarily own fee interests in real property are similarly normally outside of the scope of Section 3(c)(5)(C).

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future subsidiaries, which involve or will involve making or acquiring loans and other receivables that qualify under Sections 3(c)(5)(A) or (B).

Sections 3(c)(5)(A) and (B)

An issuer of securities may rely on the Sections 3(c)(5)(A) and (B) exceptions if it is (i) not engaged in the business of issuing (A) redeemable securities, (B) face-amount certificates of the installment type or (C) periodic payment plan certificates and (ii) primarily engaged in either of the following (X) for purposes of Section 3(c)(5)(A), the business of purchasing or otherwise acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the sales price of merchandise, insurance and services or (Y) for purposes of Section 3(c)(5)(B), the business of making loans to manufacturers, wholesalers, and retailers of, and to prospective purchasers of, specified merchandise, insurance and services.

The staff of the Division of Investment Management (“IM Staff”) of the SEC has issued numerous no-action letters that identify the types of loans and receivables that an issuer must hold in order to qualify for the exceptions under Section 3(c)(5)(A) and (B). Earlier no-action letters under Section 3(c)(5)(A) in particular espoused the view that this Section excluded only those companies engaged in “sales financing activity.”4  The prevailing theme in those letters is that the receivables or loans held by the issuer must relate to the sale of specific merchandise, insurance or services. For purposes of Section 3(c)(5)(A), the loans and receivables must represent the sales price of merchandise, insurance or services,5 and for purposes of Section 3(c)(5)(B), the loans must represent the purchase price of specific goods or services.6  In New England Education Loan Marketing Corp.,7 however, the IM Staff noted that “sales financing activity” is not a defined term in Section 3(c)(5) and appears to be used by the IM Staff to describe the requirement, for purposes of Sections 3(c)(5)(A) and (B), that a note must relate to “a sale of specified merchandise, insurance or services.”8 In this same letter, the IM Staff emphasized that the appropriate test under Section 3(c)(5)(A) is not whether a company is engaged in “sales financing,” but whether there is a direct nexus between the obligation being purchased and the sale of specific merchandise, insurance or services. As articulated in the IM Staff’s most recent no-action letter addressing Section 3(c)(5)(A), “a company not engaged in a traditional form of factoring or sales financing, but otherwise falling within the terms of Section 3(c)(5)(A), may be excluded from the definition of ‘investment company’ by the Section.”9

4 See, e.g., Educational Loan Mktg. Assn., Inc., SEC No-Action Letter (Feb. 4, 1986); World Evangelical Dev., Ltd., SEC Staff No-Action Letter (Apr. 5, 1979) ) (“World Evangelical”).

5 See, e.g., Raymond James & Assocs., Inc., SEC No-Action Letter (July 14, 1988); World Evangelical.

6 See, e.g., Alleco, Inc., SEC No-Action Letter (July 14, 1988); Architects/Engineers Reciprocal Capitalization Corp., SEC No-Action Letter (Apr. 15, 1981); MESBIC, Inc., SEC No-Action Letter (June 21, 1979) (“MESBIC”); World Evangelical.

7 SEC No-Action Letter (May 22, 1998).

8 Id.

9 See, Royalty Pharma, SEC No Action Letter (Aug. 13, 2010).

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In various no-action letters over the years, the IM Staff has taken the position that, in order to rely on Section 3(c)(5)(A) or (B), generally at least 55% of an issuer’s assets must consist of qualifying assets that meet the requirements of the relevant exception. These no action letters identify the following as qualifying assets under Section 3(c)(5)(A) and (B): bankers and trade acceptances,10 credit card receivables,11 equipment leases,12 equipment loans,13 inventory loans,14 loans to finance the purchase of electric facilities and related equipment and machinery,15 loans to purchase farm products,16 franchise fee receivables,17 installment sales contracts tied to specific manufactured home units,18 loans to finance public works projects,19 and student loans to finance the purchase of educational services.20 Over time, the IM Staff has established certain guiding principles with respect to whether loans are sufficiently tied to “specific” merchandise and services. In general, the IM Staff has conditioned reliance on Section 3(c)(5)(A) not on the nature of the obligations but rather on the strength of the connection between the obligations held by the issuer and the subject merchandise, services, or equipment.21

The IM Staff has also taken the position in several no-action letters, which we refer to as the Refinance Letters,22 that qualifying assets also include loans that are provided to a borrower where the proceeds from the loan are used by the borrower to refinance existing loans originally used to purchase specific merchandise. For example, in the Refinance Letters, the IM Staff did not recommend enforcement against certain foreign sovereigns that sought to offer securities to the public in the United States but did not register the respective issuing entities (generally organized as trusts) as investment companies in reliance on Section 3(c)(5)(A) of the 1940 Act.23 The Refinance Letters suggest that the IM Staff would not

10 Sterling Franc Invs. & Fin., SEC No-Action Letter (Apr. 26, 1985); First Nat’l. Bank of Chicago, SEC No-Action Letter (May 5, 1980).

11 See, e.g., Ambassador Capital Corp., SEC No-Action Letter (Oct. 6, 1986).

12 See, e.g., B.C. Zeigler and Co., SEC No-Action Letter (Sept. 11, 1991); State of New Jersey, SEC No-Action Letter (May 21, 1984) (“State of New Jersey”); U.S. Mun. Lease Acceptance Corp., SEC No-Action Letter (Apr. 11, 1983) (“U.S. Mun. Lease”); Imperial Bank, SEC No-Action Letter (Dec. 15, 1982) (“Imperial Bank”); The Chicago Corp. SEC No-Action Letter (Oct. 12, 1982); Woodside Group, SEC No-Action Letter (Apr. 14, 1982).

13 See, e.g., Citytrust, SEC No-Action Letter (Dec. 19, 1990); State of Georgia Installment Purchase Contracts, SEC No-Action Letter (Apr. 10, 1985); Coop. Ass’n of Tractor Dealers, Inc., SEC No-Action Letter (June 22, 1981).

14 See, e.g., Crescent Capital Corp., SEC No-Action Letter (Oct. 3, 1980).

15 See, e.g., Colorado-Ute Fin. Serv. Corp., SEC No-Action Letter (May 5, 1986).

16 See, e.g., Union Trust Co., SEC No-Action Letter (Nov. 26, 1971).

17 See, e.g., Econo Lodges of Am., SEC No-Action Letter (Dec. 22, 1989) (“Econo Lodges”); Days Inn of Am., Inc. SEC No-Action Letter (Dec. 30, 1988) (“Days Inn”).

18 See, e.g., Ziegler Mortgage Sec., Inc., SEC No-Action Letter (Oct. 8, 1984).

19 See, e.g., Municipality Fin. Ltd., SEC No-Action Letter (Apr. 28, 1994); Banco Nacional de Obras y Servicios Publicos, S.A., SEC No-Action Letter (Nov. 24, 1977).

20 See, e.g., New England Educ. Loan Mktg. Corp., SEC No-Action Letter (May 22, 1998).

21 See, e.g., Econo Lodges.

22 See, e.g., Hellenic Republic Foreign Military Sales Loans, SEC No-Action Letter (Jan. 10, 1991); Islamic Republic of Pakistan, SEC No-Action Letter (Jan 18, 1989); Hashemite Kingdom of Jordan, SEC No-Action Letter (Nov. 21, 1988); Republic of Turkey, SEC No-Action Letter (Nov. 3, 1988); State of Israel Foreign Military, SEC No-Action Letter (Aug. 17, 1988) (collectively, the “Refinance Letters”).

23 See n. 14.

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recommend enforcement against a refinancing arrangement if there were a direct nexus between the loans being refinanced and the original, underlying merchandise24 consistent with Section 3(c)(5)(A) and (B).

PFC subsidiaries qualifying for an exception from registration as an investment company under the 1940 Act pursuant to either Section 3(c)(5)(A) or Section 3(c)(5)(B) of the 1940 Act primarily acquire marketplace loans that are used to purchase specified merchandise, services or insurance or are used to refinance indebtedness that was initially incurred to purchase specified merchandise, services or insurance. Any marketplace loans acquired by such subsidiaries are subject to an analysis of the borrower’s use of proceeds from the marketplace loan.  PFC uses that information to determine whether the loan in question is sufficiently tied to specifi

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		CORRESP

[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

November 2, 2015

VIA EDGAR

Asen Parachkevov, Attorney Adviser

Jeff Long, Staff Accountant

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

 Registration Statement (333-206661) of
Prospect Capital Corporation (the “Fund”)

Dear Mr. Parachkevov and Mr. Long:

We are in receipt of oral comments provided by each of you on October 20, 2015 and October 21, 2015 regarding the Fund’s Registration Statement on Form N-2 (the “Registration Statement”).

The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the Fund’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 2 to the Fund’s Registration Statement being filed today.

The Fund’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.

Mr. Asen Parachkevov

Mr. Jeff Long

November 2, 2015

Page 2

Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Registration Statement.

1.    Please revise footnote 8 relating to the “Acquired Fund Fees and Expenses” item in the Fees and Expenses table to include greater detail regarding the assumptions made in calculating such item relating to CLO related expenses.

Based on written guidance by the Commission staff, Instruction 10.a to Item 3 does not apply to expenses associated with investments in structured finance vehicles, collateralized debt obligations, or other entities not traditionally considered pooled investment vehicles.  Please see the Commission staff’s guidance release, “Staff Responses to Questions Regarding Disclosure of Fund of Funds Expenses” (https://www.sec.gov/divisions/investment/guidance/fundfundfaq.htm).  Inasmuch as the CLOs in which the Fund has investments are structured finance vehicles (see Credit Risk Retention, Release No. 34-73407; File No. S7-14-11, Securities and Exchange Commission,(Oct. 22, 2014), at 71), the Fund believes that its investments in these vehicles should not be included in its Acquired Fund Fees and Expenses calculation. The Fund has stated in the note that expenses of the CLOs in which it is invested are not included.

2.    In regard to prior comment 27, please provide more detail explaining why the Class C shares of Harbortouch Payments LLC more than doubled in value from $39,372,000 to $80,202,000.

The Board of the Fund reviewed valuation information, including a valuation report from an independent third party valuation firm and inputs from the Advisor. The Board determined in good faith that the total enterprise value of Harbortouch Payments LLC (“Harbortouch”) had increased by approximately $87 million (or approximately 17%).  The Board determined that it would be appropriate to allocate $11 million of this amount to an equal amount of increase in the principal amount of indebtedness supporting Harbortouch’s business growth, that it would be inappropriate to increase the value of its debt investment in Harbortouch’s operating companies in excess of the principal amount and accordingly allocated the remaining increase to its equity interest, which is entirely in the form of Class C shares.

3.    In response 38 of your prior response letter, it is stated that the Fund filed a Form 10-K/A on September 11, 2015 to include “audited” financials but such financials were in fact unaudited. Please clarify as much in your response.

Mr. Asen Parachkevov

Mr. Jeff Long

November 2, 2015

Page 3

The referenced response should have stated that the Fund filed a Form 10-K/A on September 11, 2015 to include unaudited financials.

4.    In regard to response 18 of your prior response letter, please confirm that the small business loans have been held less than 12 months.  Otherwise, please disclose small business loans that have been held for more than 12 months in your Schedule of Investments in accordance with Schedule 12-12 under Regulation S-X.  Additionally, please supplementally provide details regarding the purchase and sale of such small business loans.  For example, are they purchased individually or as pools of loans.  Please provide detail regarding the valuation process of such small business loans.  The Commission staff believes that each such loan should be fair valued separately.  If they were not fair valued separately, what would the difference be regarding the aggregate fair value.

The Fund confirms that there were 5 loans with fair value of $44,744 with holding durations of greater than 12 months as of June 30, 2015.  The Fund will, in future filings, disclose small business loans with holding durations of greater than 12 months in its Schedule of Investments in accordance with Schedule 12-12 under Regulation S-X if the aggregate of such loans with individual principal amounts not in excess of $100,000 exceeds 0.1% of the Fund’s total assets.  The Fund believes that information about individual loans held for a few months beyond one year (almost none have maturities in excess of 18 months at purchase) in such minimal individual and aggregate amounts are of no conceivable interest to investors in the Fund.  The Fund purchases individual loans. With respect to valuations, the valuation process for the small business loans is performed in accordance to the same level 3 principles applicable to other level 3 assets under ASC 820. Specifically, the individual loans are grouped into separately identified pools based on the current status (i.e. paying, delinquent) and term for the purposes of determining fair value. The fair value is estimated by using a discounted cash flow methodology based upon significant unobservable inputs, such as loss adjusted discount rates and projected loss rates.  The Fund accordingly believes that because the criteria are applied to each loan, it effectively values each of these loans separately.

5.    Please explain and represent that the Fund reasonably believes that its assets will provide adequate cover to allow the Fund to satisfy all of its unfunded commitments.

The Fund understands that this comment supersedes prior comments received from the staff on the status of its unfunded commitments.  The Fund reasonably believes that its assets will provide adequate cover to allow the Fund to satisfy all of its unfunded commitments.  The bases for the Fund's belief are primarily that (i) historically it has rarely utilized more than 40% of its revolving credit line, which on average over the

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previous eight (8) quarters permitted additional borrowings of up to $411.7 million, whereas its average unfunded commitments over such time was $137.6 million and over the previous four (4) quarters was $88.2 million; (ii) the Fund receives repayments, prepayments and sales proceeds on its portfolio investments that have ranged from $108.5 million to $863.1 million over the past eight quarters and have averaged $302.5 million per quarter over that period; (iii) while the Fund does not hold a large amount of highly liquid assets at any one time, it generally holds a substantial amount of Term Loan A loans and portions of large syndicated loans (for example, $1.1 billion and $395 million, respectively, as of June 30, 2015), which are quite liquid and can be sold promptly, and (iv) in addition, a majority of its portfolio assets are of a nature that are salable over a relatively short period to generate cash.

6.    In regard to response 22 of your prior response letter, of the wholly-owned and substantially wholly-owned subsidiaries that are not consolidated, please explain the rationale as to why such subsidiaries are not consolidated.

In accordance with Regulation S-X and the AICPA Audit and Accounting Guide for Investment Companies and ASC 810—Consolidation, the Fund generally will not consolidate its interest in any company other than in investment company subsidiaries and controlled operating companies substantially all of whose business consists of providing services to the Fund.  The Fund has reviewed the October 2014 IM Guidance Update, “Investment Company Consolidation,” and that in reaching the foregoing conclusions the Fund took the guidance into account.

American Property REIT Corp. (“APRC”) is a qualified REIT which holds investments in several real estate properties located in the Southeastern United States.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  APRC is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Arctic Energy Services, LLC (“AES”) provides oilfield service personnel, well testing flowback equipment, frac support systems and other services to exploration and development companies in the Rocky Mountains.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  AES is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic

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operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

CCPI Inc. (“CCPI”)  is a manufacturer of temperature measurement solutions and refractory materials for the aerospace, aluminum, automotive g, heat treatment, steel, and other industries with operations in Blanchester, Ohio.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CCPI is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

CP Energy Services Inc. (“CPES”) provides oilfield flowback services and fluid hauling and disposal services in Texas and Oklahoma through its subsidiaries.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CPES is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Credit Central Loan Company, LLC (“CCLC”) is a branch-based provider of installment loans with operations in South Carolina, Tennessee and Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  CCLC is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Echelon Aviation LLC (“EAL”) is an aircraft leasing company with operations in New York, New York.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  EAL is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Edmentum Ultimate Holdings, LLC (“EUH”) owns 100% of the equity of Edmentum, Inc., which is an all subscription based software and service provider of online curriculum and assessments to the U.S. education market with operations in Minneapolis, Minnesota.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  EUH is also excluded from the definition of investment

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company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

First Tower Finance Company LLC (“FTFC”) owns 100% of First Tower, LLC, a multiline specialty finance company.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  FTFC is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Freedom Marine Solutions, LLC (“FMS”) owns, manages and operates offshore supply vessels that serve the oil and gas industry in the Gulf of Mexico.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  FMS is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Gulf Coast Machine & Supply Company (“GCMSC”) is a provider of value-added forging solutions to energy and industrial end markets with operations in Beaumont, Texas.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  GCMSC is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

Harbortouch Payments, LLC (“HPL”) is a provider of transaction processing services and point-of sale equipment used by merchants across the United States with operations in Allentown, Pennsylvania.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  HPL is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

MITY, Inc. (“MITY”) is a designer, manufacturer and seller of multipurpose room furniture and specialty healthcare seating products with operations in Orem, Utah.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  MITY is also excluded from the definition of investment company under FASB ASC 946-10-15 because its business purpose and activity includes making

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Page 7

investments for strategic operating purposes and excludes making multiple substantive investments and investing with an exit strategy.

National Property REIT Corp. (“NPRC”) is a qualified REIT that holds for investment, operates, finances, leases, manages, and sells a portfolio of real estate assets, including, but not limited to, industrial, commercial, and multi-family properties located in the Southeastern United States, Michigan and Texas, and engages in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. Additionally, through its wholly-owned subsidiaries, NPRC invests in online consumer loans.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 A

CORRESP
1
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		CORRESP

November 2, 2015

VIA EDGAR
Asen Parachkevov, Attorney Adviser

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

 Registration Statement (File No. 333-206661) of
Prospect Capital Corporation (the "Fund")

Dear Mr. Parachkevov:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Fund hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on November 2, 2015 so that it may become effective by 4:05 p.m. (New York time) on November 2, 2015 or as soon thereafter as practicable.

The Fund hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Fund from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Fund hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Brian H. Oswald

Name: Brian H. Oswald

Title: Chief Financial Officer, Chief Compliance Officer,
         Treasurer and Secretary

1

1

     September 30, 2015  Richard Prins Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, NY 10036  Re:  Prospect Capital Corporation
Registration Statement on Form N-2  File No. 333-206661
Dear Mr. Prins:
Prospect Capital Corporation (the “Fund”) f iled a draft shelf registration statement on
August 31, 2015 (the “Registration Statement”), under which the Fund may offer up to $5,000,000,000 of shares of its common stock, prefe rred stock, warrants, subscription rights,
debt securities or units (collectively, the “Securi ties”).  The Securities may be offered at prices
and on terms to be disclosed in one or more supplements to this Prospectus.  Terms that are
capitalized but not defined herein shall have  the same meaning assigned to them in the
Registration Statement.

Whenever a comment is made in one location,  you should consider it applicable to all
similar disclosure appearing elsewhere in the registration statement (including all future prospectus supplements).  We have the following comments:

General

1. Please advise us if you have submitted or exp ect to submit an exemptive application or
no-action request in connection wi th your Registration Statement.

2. Please confirm that the Fund does not intend to issue preferred stock within a year from
the effective date of the Registration Statement.

3. Please state in your response letter whethe r FINRA will or has reviewed the proposed
underwriting terms and arrangements of the transaction involved in the Registration
Statement.

4. The Registration Statement discloses that more than 15% of the Fund’s assets are
invested in CLO vehicles. Plea se explain in your response whether the CLO vehicles in

which the Fund invests would be deemed to be investment companies under the 1940 Act
but for the exceptions set forth in Section 3(c)(1) or 3(c)(7).

Prospectus Summary

Page 3

5. In the “Our Investment Objectives and Policie s” subsection, it is disc losed that the Fund
invests “primarily in first and second lie n senior loans and mezzanine debt.” Please
explain if the Fund seeks to achieve a particular allocatio n among the three categories of
debt investments (the Fund’s investments in  first lien, subordinated secured debt and
subordinated unsecured debt is, respectiv ely, 55.1%, 18.8% and 2.2% as of June 30,
2015).
6. The disclosure states that “CLOs are typi cally highly levered up to approximately 10
times, and therefore the junior debt and equity tranches that [the Fund] will invest in are
subject to a higher risk of total loss.” Is th e stated leverage ratio representative of the
Fund’s investments? Please disclose the range  of CLO leverage ratios in the Fund’s
portfolio.
Page 4

7. Under “Use of Proceeds,” the disclosure st ates that the Fund intends to use the net
proceeds from selling securities “initially to maintain balance sheet liquidity, involving
repayment of debt under [the Fund’s] credit f acility, if any, investments in high quality
short-term debt instruments or a combination thereof, and thereafter to make long-term
investments in accordance with [the Fund’s] i nvestment objective.” We also note that on
page 79, the Fund indicates that it “anticipates  substantially all of the proceeds…will be
used for the above purposes within six months.”  It is the Staff’s view that Section 58 of
the 1940 Act requires a business development comp any to invest all or substantially all of
the proceeds from an offering in accordance with its business objective within two years
from the month in which funds are received by  the registrant.  Please confirm that the
Fund will comply with the Staff’s position a nd revise the disclosure accordingly.
 Further, please disclose if the Fund intends to use offering proceeds to make distributions
to shareholders, which will constitute a return of capital. If so, please explain briefly the
tax consequences of returning capital to shareholders.
8. Under “Distributions,” it is disclosed that F und distributions may include a portion that is
a “tax-free” return of capital. Please remove the reference to term “tax-free” return, as it
is potentially mislead ing to investors.

Fees and Expenses

Page 6

9. The Fee Table indicates that “Other Expenses” of the F und have increased. In your
response, please explain the reason for the increase.

Risk Factors

Page 10

10. Please include specific risk disclosures regard ing the Fund’s investme nts in the “Business
Services” industry. In your re sponse, please explain to the Staff how the Fund defines the
industry. Furthermore, with respect to the Fund’s investme nts in CLOs, does the Fund
have sufficient information regarding the unde rlying borrowers to determine whether the
Fund is concentrated in a pa rticular industry? The Fund cannot ignore CLO investments
if it has reason to know the industry classification of the underlying borrowers
comprising the CLOs.
11. Please add risk disclosures regarding the Fund’s proposed spin-offs of its consumer
online lending business, real es tate business and structured credit business, including any
risks to the Fund if it fails to obtai n regulatory approval for the spin-offs.

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

Page 42

12. In the subsection describing the Fund’s proposed  spin-off transactions, please explain that
while the Fund has applied for exemptive reli ef to authorize the transactions under
Section 57(a)(4) of the 1940 Act, there is no gua rantee that such relief  will be granted.

Please clearly state which of the proposed spin -offs are going to be partial rather than
complete divestitures.   Further, please explain in the corresponden ce filing whether any of the proposed “spin-
offs” represent a spin-off of a business as described in ASC 505-620-20?  Did the Fund’s auditors concur with the assessment?

Page 44

13. The Prospectus includes a chart of the com position of the investme nt portfolios by type
of investment.  The percentage noted for th e CLO investments does not agree to what is
noted as a CLO in the Schedul e of Investments.  Are there CLOs in the Schedule of
Investments that are not identif ied as a CLO?  If so, ensure  going forward that each CLO
is identified appropriately in the Schedule of  Investments as either CLO equity or CLO
Debt.

Page 69

14. Under the sub-section titled “Operating Expenses ”, it is disclosed that the allocation of
overhead expenses from Prospect Admi nistration was (in t housands) $21,906, $14,373
and $8,737 for the years ended June 30, 2015, 2014 and 2013, respectively.  In your response, please explain the reason for th e increasing allocation of administrative
expenses to the Fund.

Page 70

15. In the “Net Realized Losses” subsection, the disclosure stat es that the impairments of
several Fund investments were “other-than- temporary.”  Please explain how the Fund
determines than an impairment is “temporary.” Please provide your analysis how such treatment is consistent with GAAP.

Business

Page 84

16. In the Senior Securities table, consider disc losing total senior securities and the overall
asset coverage ratio by year.
 Page 111

17. With respect to the Board’s approval of th e Investment Advisory Agreement, please
revise the disclosure to disc uss the specific circumstances of the registrant and how the
board evaluated each factor, as conclusory statements or a list of factors are not considered sufficient disclosure. See It em 24 of Form N-2, Instruction 6(f).

Financial Statements

General

18. Prospect Small Business Lending formed on 1/ 27/14 and is a wholly owned consolidated
subsidiary.  The Schedule of Investments de scribes the investment as “Small Business
Whole Loan Portfolio” and states that there are 40 small business loans purchased from Direct Capital Corporation and 2306 small business loans purchased from On Deck
Capital, Inc.  As Prospect Small Business Le nding is disclosed as being a wholly owned
consolidated subsidiary pleas e explain why the underlying loans are not individually
identified in the Schedule of Investments.     In addition, please explain why the
investment is categorized under Non Controlle d/Non Affiliated Investments when this is
a wholly owned subsidiary.
19. We note that certain investments are linked to LIBOR rates.  Please disclose the specific
LIBOR rate (1 month, 3 month, 6 month.)

20. In the Correspondence filing please discuss what  the Net Operating Income Interest or
Net Revenue Interest lines represen t for particular investments.

21. Consider enhancing the Accompany Notes to th e Financial Statements in the section for
Investment Risk on Page F-42 for investme nts in CLO Equities.  See Notes to the
Financial Statements, dated March 31, 2015, fo r Oxford Lane Capital Corp for an
example of this disclosure.
 Consolidated Schedule of Investments:

22. In your response, confirm that all wholly owned and all substant ially wholly owned
subsidiaries are consolid ated with the financial statements of the Fund.

23. Has the Fund performed an analysis as to wh ether the disclosure requirements of Rules 3-
09 or 4-08(g) of Regulation S-X should be ap plied? The Staff believes that Rules 3-09
and 4-08(g) of Regulation S-X apply to BD Cs and registered investment companies
(“RICs”).  Rule 3-09 of Regul ation S-X is applicable for a majority owned subsidiary
(greater than 50% ownership) which is not c onsolidated by the Registrant. Rule 4-08(g)
of Regulation S-X is applicable for subsidiari es (generally, 25% or more ownership) not
consolidated.

24. In the Footnotes to the Schedule of Inve stments, include the percentage of non-
qualifying assets under Section 55(a) of the 1940 Act.  Wh at was the percentage at
6/30/15?
25. With respect to your valuation methodology for debt investments, pl ease explain in your
response whether the Fund is in compliance wi th the principles stated in ASC 820, as
approximately 55% of the portfolio is valu ed at cost.  Specifically, ASC 820-10-35-54f
states:  “The objective is to determine th e point within that range that is most
representative of fair value under current ma rket conditions. A wide range of fair value
estimates may be an indication that  further analysis is needed.”

26. Provide detail on the valuation of the Ed mentum Ultimate Holdings Class A Common
Units at 6/30/15.  The price per shar e works out to $17.73 ($6,577,000 / 370,964
shares).   TCP Capital owns some of the co mmon shares and is valuing them at $4.26 per
share at 6/30/15.  Fift h Street Finance placed a value of  $1.00 at 6/30/15.  In addition,
discuss the valuation of the 10% PIK unsecu red junior note.  The current value is
$19,868,000 which represents cost/principal va lue.  In looking at the SOI for New
Mountain Finance Corp. they had a similar 10% PIK note that was valu ed at a si gnificant
discount to cost/princip al value.  Provide detail on how the value of this security was
derived.

27. Harbortouch Payments LLC – provide detail on  the write-up of the Class C shares from
3/31/15 to 6/30/15 when the valuation more than doubled from $39,372,000 to $80,202,000.
28. Confirm for the Staff in future periodic and annual filings that the Fund will comply with
the requirements of Rule 12-14 and (a) Li st each issue separately and group (1)
investments in majority-owned subsidiaries, segregating subsidiari es consolidated; (2)
other controlled companies; and (3) other affilia tes (b) if during the period there has been
any increase or decrease in the amount of inve stment in and advance to any affiliate, state
in a footnote (or if there have  been changes to numerous a ffiliates, in a supplementary
schedule) (1) name of each issuer and title of issue or nature of i ndebtedness; (2) balance
at beginning of period; (3) gross additions; (4) gross reductions; (5) balance at close of
period as shown in Column E. Include in the footnote or schedule comparable information as to affiliates in which ther e was an investment at any time during the
period even though there was no investment at the close of the period of report.

29. We note that certain investments pay PIK intere st.  Please confirm that those investment
paying PIK interest disclose the current PIK ra te along with the possibl e PIK interest rate
range or the maximum PIK interest rate that  could be paid. Please see the item addressed
in the AICPA Audit Risk Alert- Invest ment Company Industry Developments 2013/14.

Statement of Assets and Liabilities:

30. Add a “Commitments and Contingencies” line item to the Statement of Assets and
Liabilities along with a parenthetical reference to the specific note to  financial statements
that include disclosures of commitments and contingencies, such as the valuation note
included in the summary of investments.  See Article 6-04.15 of Regulation S-X.

31. What is the composition of “Cash and Cash  Equivalents” at 6/ 30/15 ($110,026,000)?  If
any investments are in money market mutual funds or other investment companies, these
investments should be disclosed separately on the Schedule of
Investments.  Additionally, confirm that a ny acquired fund fees and expenses (“AFFE”)
related to these investments is included in the fee table.
 Consolidated Statement of Operations:

32. Please explain why the full amount of the overhead allocation of $21.9 million is not
reflected on the income statement.  Should they be reported on a gross basis?
33. In your response, discuss what the income fr om Structured Credit Se curities represents
on the Statement of Operations.

Notes to Consolidated Financial Statements:

34. From Note 3. Portfolio Investments:
 “During the year ended June 30, 2015, th e valuation methodology for CCPI Inc.
(“CCPI”) changed to solely an EV analysis by removing the di scounted cash flow used in
previous periods. Management adopted this ch ange due to a lack of long-term forecasts
for CCPI. As a result of this change, and in recognition of recent company performance
and current market conditions, we increased the fair value of our investment in CCPI to
$41,352 as of June 30, 2015, a premium of $7,192 to  its amortized cost, compared to the
$1,443 unrealized depreciation recorded at June 30, 2014.”  How much of the increased fair  value was due to th e change from a discounted cash flow
method to an EV analysis?

35. As of June 30, 2015, the Fund had $88,288,000 in unfunded commitments
disclosed.  Please disclose each unfunde d commitment separately by portfolio
company.  Please confirm that the unf unded commitments are accounted for in
accordance with the comments discussed at  the January 2006 AICPA Expert Panel
Meeting:
 In making senior loan investments, the RIC might make commitments to provide
funding for a loan prior to it being issued or commit to additional amounts beyond the
existing funded portion.
 Such unfunded commitments might create a value to the RIC different from the
underlying commitment, which would create unr ealized appreciation or depreciation.
For each unfunded commitment, the RIC s hould disclose the amount and extended
value of the unfunded commitment as of  the date of the reporting period.

 The RIC may provide this disclosure by in cluding a listing of unfunded commitments
by senior loan in a separate  schedule located within th e schedule of investments or
within the notes to the schedule of investments or notes to the financial statements.   Alternatively, the RIC may state the amount and extended value of the
unfunded commitment within a footnote attached to each senior loan.

 The EP noted that the effect of such valuation changes shoul d be recognized in
determining the net asset value of the RIC even in situations in which the entire unfunded commitment itself is not reflected as a liability because it does meet the
FASB Statement No. 5 requirements.

36. Please represent to us that the Fund: (1) ha s sufficient unencumbered liquid assets to
cover the amount of its currently outstand

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		PSEC-AccelerationRequestforN-2

PROSPECT CAPITAL CORPORATION
10 East 40th Street, 42nd Floor
New York, NY 10016

November 3, 2014

U.S. Securities and Exchange Commission

Division of Investment Management

100 F Street N.E.

Washington, DC 20549

Attn: Asen Parachkevov, Esq.

RE:

 Registration Statement (333-198505) of
Prospect Capital Corporation (the “Company”)

Dear Mr. Parachkevov:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on November 3, 2014 so that it may become effective by 9:00 a.m. (New York time) on November 4, 2014 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

PROSPECT CAPITAL CORPORATION

By: /s/ Brian H. Oswald

Name: Brian H. Oswald

Title: Chief Financial Officer, Chief Compliance Officer,

Treasurer and Secretary

1

     October 1, 2014  Richard Prins Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, NY 10036  Re:  Prospect Capital Corporation
Registration Statement on Form N-2  File No. 333-198505
Dear Mr. Prins:
Prospect Capital Corporation (the “Fund”) f iled a draft shelf registration statement on
September 2, 2014 (the “Registration Statemen t”), under which the Fund may offer up to
$5,000,000,000 of shares of its common stock, prefe rred stock, warrants, subscription rights,
debt securities or units (collectively, the “Securi ties”).  The Securities may be offered at prices
and on terms to be disclosed in one or more supplements to this Prospectus.  Terms that are
capitalized but not defined herein shall have  the same meaning assigned to them in the
Registration Statement.

Whenever a comment is made in one location,  you should consider it applicable to all
similar disclosure appearing elsewhere in the registration statement (including all future prospectus supplements).  We have the following comments:

General

1. Please advise us if you have submitted or exp ect to submit an exemptive application or
no-action request in connection wi th your Registration Statement.

2. Please confirm that the Fund does not intend to issue preferred stock within a year from
the effective date of the Registration Statement.

3. Please state in your response letter whethe r FINRA will or has reviewed the proposed
underwriting terms and arrangements of the transaction involved in the Registration
Statement.

4. Please undertake that the Fund will file a post- effective amendment under Section 8(c) of
the Securities Act of 1933 in respect of any rights offering or any debt offering that

differs from its currently outstan ding Senior Notes (other than with respect to price, term
and size of the offering).

5. New offerings of debt securitie s that are consistent with the current Senior Notes should
not be characterized as “senior,” as there ar e no securities in the Fund’s capital structure
that are subordinate to the Senior Notes. Please revise the defined terms “Senior Notes”, “Senior Convertible Notes” and “Senior Un secured Notes” accordingly by removing the
term “senior” from the definitions.  Further, please include additional disclosures regarding the prior ity in interest of the Fund’s debt securities w ithin the Fund’s capital
structure, including with re spect to other indebtedness incurred by the Fund and its
subsidiaries.

6. Please confirm that all of the Fund’s who lly-owned and substantially wholly-owned
subsidiaries have been consolidated  on the Fund’s financial statements.

7. Please confirm that all portfolio company fees ( e.g. commitment, closing, origination,
structuring or diligence fees, monitoring fees, fees for providing managerial assistance,
consulting fees, etc.) are paid to the Fund only.

Prospectus Summary

Page 3

8. It is disclosed that the Fund may invest in  below investment grade securities (often
referred to as “junk”).  Please revise the descri ption of the Fund’s strategy in all relevant
sections of the Registration Statement to  include a clarification that the Fund’s
investments will include below investment grade securities (please also include a parenthetical to define such securities as “junk”).
Fees and Expenses

Page 22

9. Please update the fee table to reflect estimated  interest expenses in connection with the
offering of any debt securities within a year from the effective date of the Registration
Statement, and explain the assumptions upon wh ich such estimate is based in a footnote
to the table.  Please confirm that total interest expense amounts stated in the table reflect interest expenses associated with the F und’s credit facilities, including additional
borrowings under such facilities expected to be incurred within a year from the effective
date of the Registration Statement (please includ e a footnote that states the interest rate
applicable to such facilities).  In add ition, Note 4 to the Financial Statements, Revolving
Credit Facility, the disclosure states that the lender s charge a fee on th e unused portion of
the 2012 Facility equal to either 50 basis points, if at least ha lf of the credit facility is
drawn, or 100 basis points otherwise.  These f ees need to be disclosed in the Fees and
Expenses table in the Prospectus.

10. In footnote 6 to the fee table, please provide  additional detail regard ing the calculation of
the incentive fee, instead of cross-referencing to other sections of the Prospectus.  Please
include an explanation that the hurdle rate is fixed, and as interest rates rise, it will be
easier to surpass the hurdle rate and for the Adviser to receive an incentive fee based on
income.

11. It appears that the example contains some in advertent typographical errors. Please fix the
table.
12. There is a paragraph below the expense exam ple that states “The income incentive fee
under our Investment Advisory Agreement with  Prospect Capital Management is unlikely
to be material assuming a 5% annual return and is not includ ed in the example.”  Please
consider revising the sentence to state that the income in centive fee is based on a 7%
annualized hurdle rate and ther efore there is no income incentive fee in cluded in the
expense example as the example is based on a 5% hypothetical return.

13. Please check the placement of footnote 4 and determine whether it should be placed on
the line “Total stockholder transaction expens es (as a percentage of offering price).”

Risk Factors

Page 13

14. The Registration Statement discloses that the Fund may invest in original discount
instruments, but there is no similar disclosu re in the sections describing the Fund’s
strategy. Please revise the strategy sections to  the extent such types of investments are
contemplated by the Fund’s principal investme nt strategy.  In addition, please discuss
risks presented by investments in PIK securities. Please disclose that:
 a. the higher interest rates on PIK securities reflects the payment deferral and
increased credit risk associated with such  instruments and that such investments
generally represent a significantly hi gher credit risk than coupon loans.

b. even if accounting conditions were met, the borrower could still default when the
Fund’s actual collection is supposed to occu r at the maturity of the obligation.

c. PIK securities may have unreliable valuations because their continuing accruals
require continuing judgments about the co llectability of the deferred payments
and the value of any associated collateral.

d. PIK interest has the effect of generati ng investment income  and increasing the
incentive fees payable at a compounding rate.  In addition, the deferral of PIK
interest also reduces the loan-t o-value ratio at a compounding rate.

e. PIK securities create the risk that incen tive fees will be paid to the Adviser based
on non-cash accruals that ultimately may not  be realized, but the Adviser will be
under no obligation to reimburse the Fund for these fees.
 Page 31

15. With respect to the exemptive order received fr om the staff that gives the Fund the ability
to co-invest with affiliates, please add a de scription of the conditions under which such
co-investments are permitted.

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

Page 54

16. In the sub-section discussing First Tower, there are several references to the Fund
providing First Tower with additional capi tal to “support seasonal demand.”  Please
provide more details about the economic f actors affecting “seasonal demand” and the
need for additional funding.

Business

Page 105

17. Under the sub-section titled “Administration Ag reement”, it is disclosed that the Fund
reimbursed to the Administrator ap proximately $14,373, $8,737, $6,848 for the years
ended June 30, 2014, 2013 and 2012, respectivel y.  Per the Fund’s latest Form 10-K,
these amounts are $14.4 million, $8.7 million and $6.8 million.  Please revise.

18. Please disclose the methodology used to allocate costs and expenses under the
administration agreement and that the Fund’s board exercises oversi ght with respect to
the allocation of such expenses.

Brokerage Allocation and Other Practices

Page 155

19. Please disclose that any research or other be nefits received by the Adviser from a broker-
dealer, for transactions where the Fund will be “paying-up”, will qualify for the safe
harbor provisions under S ection 28(e) of the Securi ties Exchange Act of 1934.

Financial Statements
 F-3

20. Page 71 of the Prospectus states that cash a nd cash equivalents incl udes short term liquid
investments.  All investments need to be in  the Schedule of Investments.  Ensure that

beginning with the next 10-Q all investment s will be identified in the Schedule of
Investments.
21. The Statement of Assets and Liabilities shoul d separately disclose the amounts payable
for officers and directors, controlled companies and any other affiliates.  Ensure that this
information is presented in accordance with S-X going forward.  ASC 946-405-45-2.

22. The Statement of Changes discloses Ne t Investment Income for 2014 of $357,223 and
Distributions from Net Investment In come of $403,188.  Please discuss in the
correspondence filing whether the distributions  paid disclosed in the Statement of
Changes is on a tax basis or a GAAP basis.  In addition, should there be a separate line
for “Distributions in Excess of Net Investment Income?”

23. In the Schedule of Investments on a going forw ard basis disclose th e estimated yield on
the CLO equity positions.  Include a footnote to the Schedule of Investments stating that
the equity investments are entitled to recurr ing distributions which are generally equal to
the remaining cash flow of the payments ma de by the underlying f und’s securities less
contractual payments to debt holders and f und expenses.  The estimat ed yield is based on
current projections which are periodically re viewed and adjusted, and the estimated yield
may not ultimately be realized.  As of  June 30, 2014 the portfolio has 18.4% in CLO
equity. The Company should add additional di sclosures to the accompanying footnotes to
the Financial Statements discussing the risks associated with investing in the residual
equity of CLO investments.

24. Enhance the disclosures in the fair value hier archy disclosures included in Note 3 to the
Financial Statements , Portfolio Investments .  A Fund should determine the appropriate
classes to disclose by consider ing the nature, characteristics of risks of the securities as
well as the fair value hierarchy within which the fair value measurem ents are categorized.
There are asset categories in the Schedule of Investments that ar e not identified in the fair
value hierarchy disclosure, e .g. second lien term loan.  Determine whether the disclosures
need to be enhanced to a dd additional classes or sub ca tegories to the asset classes
already disclosed.  In additional the Company can consider presentational similar to the Schedule of Investments in identifying the cate gories of “Control Investments,” “Affiliate
Investments,” and “Non-Control/Non-Affiliate Investments.”

25. Currently the disclosures included in Note 3 to the Financial Statements, Portfolio
Investments , state significant increases or decreases in the varying fair value assumptions
would result in a decrease or increase, resp ectively, in the fair value measurement.
Enhance the disclosures to state that the assumptions do not need to be considered ‘significant” in order for there to be a change  in the fair value measurement.  For example
a small incremental change in an EBITDA mul tiple can result in a significant change in
fair vale measurement of an investment.

26. In Note 3, Portfolio Investments , required disclosures under  Regulation S-X 4-08 (g)
have been included for the unconsolidated signi ficant subsidiary First Tower Holdings of
Delaware LLC as it generated more than 10% of Prospect’s income.  The information is required to be included in the audited financ ial statements and may not be marked as
“unaudited.”  Based on the information that has been disclosed in the financial statements
of Prospect for First Tower Holdings of Delaware LLC the staff has calculated a
percentage that would trigger the requi rements of Regulation S-X 3-09 and would
therefore require audited financial statements  of First Tower Holdi ngs of Delaware LLC
to be included with the financial statements of Prospect Capital.

27. The Dividend section of the Company’s website  discloses a current dividend yield of
13.04%.  If any portion of the distributions repr esents a return of capital the reference on
the website to a current dividend yield should be changed to state “distribution rate.”

*     *     *     *     *     *

 We may have additional comments on disclosures made in response to this letter, on information supplied supplementally, or on exhi bits added in any pre-effective amendments.
  Response to this letter should be in the form  of a pre-effective amendment filed pursuant
to Rule 472 under the Securities Act.  The pre-effective amendm ent filing should be
accompanied by a supplemental letter that includ es your responses to each of these comments.
Where no change will be made in the filing in re sponse to a comment, please indicate this fact in
your supplemental letter and briefly state the basis for your position.

 You should review and comply with all appli cable requirements of the federal securities
laws in connection with the prep aration and distribution of a prel iminary prospectus. We urge all
persons who are responsible for the accuracy and adequacy of the disclosure in the filings
reviewed by the staff to be certain that they have provided all information investors require for
an informed decision.  Since the Fund and its ma nagement are in possession of all facts relating
to the fund’s disclosure, they are responsible fo r the accuracy and adequacy of the disclosures
they have made.     Notwithstanding our comments, in the ev ent the Fund requests acceleration of the
effective date of the pending registration statement, it should furnish a letter, at the time of such
request, acknowledging that
 should the Commission or the st aff, acting pursuant to dele gated authority, declare the
filing effective, it does not foreclose the Co mmission from taking any action with respect
to the filing;
 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not reliev e the Fund from its full responsibility for the
adequacy and accuracy of the disclosure in the filing; and

 the Fund may not assert this action as defense in any proceeding initiated by the
Commission or any person under the federal securities laws of  the United States.
  In addition, please be a dvised that the Division of Enforcement has access to all
information you provide to the staff of the Divi sion of Investment Management in connection
with our review of your filing or in response to our comments on your filing.
We will consider a written request for acceleration of the effective date of the registration
statement as a confirmation of the fact that those requesting acceleration are aware of their
respective responsibilities.  We will act on the request and, pursua nt to delegated authority, grant
acceleration of the e ffective date.

*     *     *     *     *     *
  Should you have any questions regarding this  letter, please contac t me at (202) 551-
6908 or Sheila Stout at (202) 551-6987.
Sincerely,
         Asen Parachkevov
Attorney Adviser  Sheila Stout Staff Accountant

CORRESP
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October 11, 2013

VIA EDGAR
 Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:                             Registration Statement (File No. 333-190850) of
  Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on October 11, 2013 so that it may become effective by 4:05 p.m. (New York time) on October 15, 2013 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital   Corporation

/s/ Brian H.   Oswald

Name:

Brian H. Oswald

Title:

Chief Financial Officer, Chief Compliance Officer,

Treasurer and Secretary

CORRESP
1
filename1.htm

[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

October 11, 2013

VIA EDGAR

Mr. Larry Greene

Senior Counsel

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:                           Registration Statement (333-190850) of
 Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

We are in receipt of comments provided by you on September 25, 2013 to Steven Grigoriou of Skadden, Arps, Slate, Meagher & Flom LLP regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Company’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 1 to the Company’s Registration Statement being filed today.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.

General

1.                                      Please state in your response letter the procedure to be followed to obtain FINRA review and clearance of the filing, including the form of prospectus supplements regarding the Company’s contemplated offerings.

Pursuant to FINRA Rule 5110(b)(7)(A), the Company’s Registration Statement and offerings thereunder are exempt from FINRA review and clearance.

2.                                      The type face of the printed document is hard to read and appears to be set forth in an inappropriately small font. Confirm the printed document will comply with the type size requirement in Rule 420.

The font size used in in the Registration Statement is in compliance with Rule 420.  Formatting on a particular screen may cause the font size to appear smaller.

Prospectus

PROSPECTUS SUMMARY

Our Investment Objective and Policies (Page 3)

3.                                      The fourth paragraph states that the Company may invest in CLOs. Later disclosure indicates that such investments may be substantial. Disclose the percent of Fund assets that may be devoted to this activity. Further, indicate whether the CLO pools which the Company expects to hold may themselves hold CLO interests as portfolio assets? Lastly, indicate whether the underlying non-U.S. borrowers may be from emerging markets.

The Company has added the below disclosure:

“Our potential investment in CLOs is limited by the 1940 Act to 30% of our portfolio.”

We note to the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) that the Company does not expect to invest in CLOs to that degree as it has, and expects to continue to have, investments in other 30% basket assets.

The Company does not, and does not currently expect to, hold interests in CLOs that hold (i) interests in other CLOs as portfolio assets or (ii) loans to non-U.S. borrowers located in emerging markets.

RISK FACTORS

Risks Relating to Our Business (Page 12)

4.                                      Disclosure in the second paragraph discusses the Company’s authority to issue shares of its common stock at below NAV. As was noted in the Company’s recent proxy the 25% “limitation” with respect to each offering may be in our view, illusory. Add appropriate

2

risk indicating that the Company could engage in multiple offerings in a short period of time which would render this 25% limitation meaningless.

The Company has added the following disclosure, which is the same disclosure added to its recent proxy statement:

“It should be noted that, theoretically, we may offer up to 25% of its then outstanding common stock each day.”

Securitization of our assets subjects us to various risks (Page 21)

5.                                      The third paragraph notes that the Company may create subsidiaries and fund such subsidiaries with: “among other things, whole loans or interests from other pools.” If accurate, confirm that the other pools are pools created by the Company, and whether the interests referred to are securities issued by or portfolio assets of, such pools.

The Company has revised the disclosure to state “among other things, whole loans”.

Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments. (Page 29)

6.                                      In light of the foreign securities risk disclosure, add an affirmative statement to the above strategy disclosure to the affect that the Company may invest in foreign securities including emerging market securities.

The Registration Statement already provides such an affirmative statement.  Please see page 29 of the Prospectus, “Our investment strategy contemplates potential investments in securities of foreign companies, including those located in emerging market countries.” (emphasis added)

We may expose ourselves to risks if we engage in hedging transactions

7.                                      For hedging purposes the Company may use derivatives, such as swaps. If credit default swaps may be employed, disclose that fact. Because the disclosure refers to swaps generally, it is not clear whether the Company will engage in total return swaps. If the Company may engage in these swaps, it must set aside an appropriate amount of segregated assets. See generally Investment Company Act Release No. 10666 (Apr. 18, 1979). Please note that the Commission recently issued a concept release exploring issues relating to the use of derivatives by funds, including whether current market practices involving derivatives are consistent with the leverage provisions of the Investment Company Act of 1940. See Investment Company Act Release No. 29776 (Aug. 31, 2011). Accordingly, please be aware that the Commission or its staff could issue future guidance related to derivatives (such as total return swaps) and leverage, including guidance related to coverage requirements, which could impact the manner in which the Company operates.

3

The Company has noted the comment.  As stated on page 30 of the Prospectus, the Company currently has no intention of engaging in hedging transactions.

Our financial results may be affected adversely if one or more of our significant equity or junior debt investments in a CLO vehicle defaults on its payment obligations or fails to perform as we expect (Page 33)

8.                                      Add the substance of the following sentence to the summary: “CLOs are typically highly levered up to approximately 10 times, and therefore the junior debt and equity tranches that we will invest in are subject to a higher risk of total loss.”

The Company has added the following sentence to the summary section on page 3, “Our Investment Objective and Policies”:

“CLOs are typically highly levered up to approximately 10 times, and therefore the junior debt and equity tranches that we will invest in are subject to a higher risk of total loss.”

Non-investment grade debt involves a greater risk of default and higher price volatility than investment grade debt

9.                                      Disclosure hereunder discusses the credit agency ratings typical for the CLOs that the Company expects to acquire. Please either (i) add disclosure, like an appendix, to the prospectus that describes these ratings, or (ii) remove the reference to the ratings.

The Company has removed the credit agency ratings reference as requested.

Risks Relating To Our Securities

Our credit ratings may not reflect all risks of an investment in our debt securities (Page 34)

10.                               If the Company’s securities are rated, add an affirmative statement to that effect at an appropriate location.

The Company has revised the relevant disclosure to add the following affirmative statement: “Our debt securities are rated by Standard & Poors.”

4

BUSINESS

Managerial Assistance (Page 131)

11.                               Disclosure hereunder discusses the fees collected for the provision of managerial assistance as required by the statute. Explain to the staff whether the fees reflect a profit for the provision of such services or whether services are provided and billed at cost.

Managerial assistance is provided to portfolio companies by Prospect Administration LLC, the Company’s administrator (the “Administrator”), at a set fee.  Such fee is remitted to the Administrator and credited by it in total to the Company against the aggregate administrative costs being reimbursed to the Administrator from the Company.  Accordingly, the Administrator does not earn a profit on such services.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16. Subsequent Events (Page F-76)

12.                               Disclosure in the note makes reference to an unregistered offering, to wit: “On August 2, 2013, we funded a recapitalization of CP Energy Services, Inc. (“CP Energy”) with $81,273 of debt and $12,741 of equity financing. Through the recapitalization, we acquired a controlling interest in CP Energy for $73,009 in cash and 1,918,342 unregistered shares of our common stock. After the financing, we received repayment of the $18,991 loan previously outstanding.” As the Company recently issued shares of its own common stock in this transaction, please explain to the staff, why the highlighted issuance should not be integrated with the Company’s ongoing public offering.

The issuance of unregistered securities pursuant to the recapitalization was made pursuant to Rule 506 (“Private Offering”).  Consistent with the five factors in Rule 502(a) regarding integration, the Company is of the view that the Private Offering should not be integrated with the Company’s ongoing public offerings (“Public Offering”).  Three of the factors point away from integration.  Firstly, the sales of the securities in the Private Offering and those in the Public Offering were not a part of a single plan of financing, as specific acquisitions are generally regarded as entirely different than general corporate purposes.  Secondly, the sales of the securities did not involve the same type of consideration (the Public Offering consideration was cash and the Private Offering consideration was other securities of CP Energy).  And thirdly, the sales were not made for the same general purpose.  The Private Offering was specific to the recapitalization of CP Energy.    The only two factors that would call for integration would be that the Public Offering and Private Offering occurred at or about the same time and involved the same security (Company shares of common stock).  Further, it should be noted that substantially all the shares issued in the Private Offering were issued to a single large institutional investor, which would be exempt under the Black Box no-action letter and its progeny even if all five factors pointing toward integration are satisfied.

5

*                                         *                                         *                                         *                                         *

The Company acknowledges that (i) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (ii) should the Commission or the Staff , acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing; (iii) the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (iv) the Company may not assert the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company has not and does not expect to submit an exemptive application or no-action request in connection with the Registration Statement.  If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (416) 777-4727.

Sincerely,

/s/ Richard Prins

Richard Prins

6

Loc: pccLtrCSver 09112013 – Wednesday, September 25, 2013
9/25/2013 11:14:19 AM

          Steven Grigoriou
Skadden, Arps, Slate,
  Meagher & Flom LLP
Four Times Square
New York, New York 10036- 6522
 Re:       Prospect Capital Corporation (the “Fund”)
             File Numbers 814- 00659 & 333- 190850
       Dear Mr. Grigoriou:
             On August 27, 2013, the Fund filed a registration statement on Form N -2 under the
Securities Act of 1933 (“Securities Act”).   Your letter of even date requested expedited review .
With certain exceptions, we have limited our review of the filing.  The Fund is a business development company  regulated under the Investment Company Act of 1940 (“1940
Act”).   With this filing the Fund may offer from time to time on a delayed or continuous basis,
pursuant to Rule 415 under the Securities Act, the Fund’s common stock, preferred stock, debt securities, subscription rights, warrants, or units.  The filing is intended to replace the Fund’s current shelf registration statement and, accordingly , it has been submitted pursuant to the
requirements of Rule 415(a)(6) under the Securities Act.
We have referenced the captions and page numbers from the registration statement to
indicate the section s of the registration statement to which each comment relates. However, you
should regard any comment made with respect to one section of the  registration statement to
apply to similar disclosure elsewhere in the registration statement.
Our comments regarding the filing are set forth b elow.

General
 1.  Please state in your response letter the procedure to be followed to obtain FINRA review
and clearance of the filing, including the form of prospectus supplements regarding the Fund’s contemplated offerings.
 2. The type face of the p rinted document is hard to read and appears to be set forth in an
inappropriately small font.  Confirm the printed document will comply with the type size requirement in Rule 420.

Loc: pccLtrCSver09112013 –  Wednesday, September 25, 2013
9/25/2013 11:14:19 AM

Prospectus

PROSPECTUS SUMMARY
Our Investment Objective and Policies  (Page  3)

3. The fourth paragraph states that  the Fund may invest in CLOs.  Later disclosure indicates
that such investments may be substantial.  Disclose the percent of Fund assets that may  be
devoted to this activity.  Further, indicate whether the CLO pools which the Fund expects to hold
may themselves hold CLO  interests as portfolio assets?   Lastly, indicate whether the underlying
non-U.S. borrowers may be from emerging markets.

RISK FACTORS
Risks Relating to Our Business (Page 12)

4. Disclosure in the s econd paragraph discusses the Fund’s authority to issue shares of its
common stock at below NAV.  As was noted in the Fund’s recent proxy the 25% “ limitation ”
with respect to each offering  may be  in our view, illusory.  Add appropriate risk  indicating that
the Fund could engage in multiple offerings in a short period of time which would render this
25% limitation  meaningless .

Securitization of our assets subjects us to various risks (Page 21)

5. The third paragraph notes that the Fund may  create subsidiaries and fund such
subsidiaries with: “ among other things, whole loans or interests from other pools .”  If accurate,
confirm that the other pools are pools created by the Fund, and whether the interests referred to
are securities issued by or portfolio assets of, such pools.
Our investments in foreign securities may involve significant risks in addition to the risks
inherent in U.S. investments. (Page 29)
6. In light of the foreign securities risk disclosure, add an affirmative statement to the above
strategy disclosure to the affect that the Fund may invest in foreign securities including emerging
market securities.
We may expose ourselves to risks if we eng age in hedging transactions
7. For hedging purposes the Fund may use derivatives, such as swaps.  If credit default
swaps may be employed, disclose that fact.  Because the disclosure refers to swaps generally, it
is not clear whether the Fund will engage in total return swaps.  If the Fund may engage in these
swaps, it must set aside an appropriate amount of segregated assets. See generally Investment
Company Act Release No. 10666 (Apr. 18, 1979).  Please note that the Commission recently issued a concept release exploring issues relating to the use of derivatives by funds, including
whether current market practices involving derivatives are consistent with the leverage provisions of the Investment Company Act of 1940.  See Investment Company A ct Release No.
29776 (Aug. 31, 2011).  Accordingly, please be aware that the Commission or its staff could

Loc: pccLtrCSver09112013 –  Wednesday, September 25, 2013
9/25/2013 11:14:19 AM
 issue future guidance related to derivatives (such as total return swaps) and leverage, including
guidance related to coverage requirements, which co uld impact the manner in which the Fund
operates.
Our financial results may be affected adversely if one or more of our significant equity or junior debt investments in a CLO vehicle defaults on its payment obligations o r fails to
perform as we expect  (Pag e 33)
8. Add the substance of the following sentence to the summary: “ CLOs are typically h ighly
levered up to approximately 10 time s, and therefore the junior debt and equity tranches that we
will invest in are subject to a higher risk of total loss.”
Non-investment grade debt involves a greater risk of default and higher price volatility than
investment grade debt
9. Disclosure hereunder discusses the credit agency ratings typical for the CLOs that the
Fund expects to acquire.  Add disclosure, like the appendix, to the prospectus that describes these ratings.
Risks Relating To Our Securities
Our credit ratings may not reflect all risks of an investment in our debt securities  (Page 34)
 10. If the Fund’s s ecurities are rated, add an affirmative statement to that effect at an
appropriate location.

BUSINESS
Managerial Assistance (Page 131)

11. Disclosure hereunder discusses the fees collected for the provision of managerial
assistance as required by the statute.  Explain to the staff wh ether the fees reflect a profit  for the
provision of such services or whether services are provided and billed at cost.
PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note  16. Sub sequent Events (Page F -76)

12. Disclosure in the note makes reference to  an unregistered offering , to wit :  “On August  2,
2013, we funded a recapitalization of CP Energy Services, Inc. ("CP Energy") with $81,273 of debt and $12,741 of equity financing. Through the recapitalization, we acquired a controlling
interest in CP Energy for $73,009 in cash and 1,918,342 unregistered shares of our common
stock .  After the financing, we received repayment of the $18,991 loan previously outstanding. ”
As the Fund r ecently issued shares of its own common stock in this transaction, please explain to
the staff,  why the highlighted issuance should not be integrated with the Fund’s ongoing public
offering.

Loc: pccLtrCSver09112013 –  Wednesday, September 25, 2013
9/25/2013 11:14:19 AM
 *        *          *          *          *          *          *          *          *          *          *

            We note that portions of the filing are incomplete.   We may have additional comments on
such portions when you complete them in a pre -effective amendment, on disclosures made in
response to thi s letter, on information supplied in your response letter, or on exhibits added in
any pre -effective amendments.
            Whenever a comment is made in one location, it is considered applicable to all similar disclosure appearing elsewhere in the reg istration statement.
            Response to this letter should be in the form of a pre -effective amendment filed pursuant
to Rule 472 under the Securities Act.  Where no change will be made in the filing in response to a comment, please indicate this fact  in your response letter and briefly state the basis for your
position.  Where changes are made in response to our comments provide information regarding the nature of the change and, if appropriate, the location of such new or revised disclosure in the amended filing.  As required by the rule, please insure that you mark new or revised disclosure to
indicate change.
             Please advise us if you have submitted or expect to submit an exemptive application or no-action request in connection with your registration statement.
             You should review and comply with all applicable requirements of the federal securities laws in connection with the preparation and distribution of a preliminary prospectus.
             We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an informed decision.  Since the Fund and its management are in possession of all facts relating to the Fund’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.              In the event the Fund requests acceleration of the effective date of the pending
registration statement, it should furn ish a letter, at the time of such request, acknowledging that

• the Fund is responsible for the adequacy and accuracy of the disclosure in the
filing;
• should the Commission or the staff, acting pursuant to delegated authority, declar e the filing effective, it does not foreclose the Commission from taking any
action with respect to the filing;
• the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Fund from its full
responsibility for the adequacy and accuracy of the disclosure in the filing; and
• the Fund may not assert this action as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United Sta tes.

Loc: pccLtrCSver09112013 –  Wednesday, September 25, 2013
9/25/2013 11:14:19 AM
  In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Investment Management in connection
with our review of your filing or in response to our comments on your filing.
             We will consider a written request for acceleration of the effective date of the registration statement as confirmation of the fact that those requesting acceleration are aware of their respective responsibilities.
             Shoul d you have any questions regarding this letter, please contact me at (202) 551-
6976.                                                                                        Sincerely,

                                                                                    /s/Larry L. Greene
                                                                                    Larry L. Greene
                                                                                    Senior Counsel
 Wednesday, September 25, 2013

CORRESP
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filename1.htm

PROSPECT CAPITAL CORPORATION

10 East 40th Street, 44th Floor

New York, New York 10016

September 10, 2013

VIA EDGAR

Larry Greene
 Securities and Exchange Commission
 Division of Investment Management
 100 F Street, N.E.
 Washington, D.C. 20549

Re:                                                                             Prospect Capital Corporation

Preliminary Proxy Statement Filed on August 26, 2013
 (the “Proxy Statement”)

Dear Mr. Greene:

We are in receipt of oral comments provided by you on September 5, 2013 regarding Prospect Capital Corporation’s (the “Company”) preliminary proxy statement filed on August 26, 2013.

We have considered your comments and have made the responses and amendments to the Company’s proxy statement discussed below.  For ease of reference, we have included your comments below followed by our responses.

The Company acknowledges that: (1) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (2) staff (“Staff”) comments or changes to disclosure in response to Staff comments do not foreclose the Securities and Exchange Commission (the “SEC”) from taking any action with respect to the filing; and (3) the Company may not assert Staff comments as a defense in any proceeding initiated by the SEC or any person under the federal securities laws of the United States.

Comments

Comment 1:                           We note that for Proposals I and III, abstentions and broker non-votes will have the effect of a vote against each proposal.  For Proposal II we note that abstentions will not be included in determining the number of votes cast and, as a result, will have no effect on the proposal.  Please disclose the effect of broker non-votes with respect to Proposal II.

Response:  We have amended disclosure accordingly.

Comment 2:                           Who is the “we” in the following sentence on page 3:  “We will bear the expense of the solicitation of proxies for the Annual Meeting, including the cost of preparing, printing and mailing this Proxy Statement, the accompanying Notice of Annual Meeting of Stockholders and proxy card.”

Response:  Please see the cover page of the proxy statement where Prospect Capital Corporation is defined as the “Company” or “we,” “us” or “our”.

Comment 3:                           Has Andy Cooper held any other public directorships in the past 5 years that are no longer held?

Response:  Mr. Cooper has not held any other public directorships in the past 5 years.

Comment 4:                           Please see the sentence:  “It should be noted that the maximum number of shares salable below NAV on any given date pursuant to this authority that could result in dilution to stockholders is limited to 25% of the Company’s then outstanding common stock immediately prior to such date.”  If the Company could offer 25% each day, so state and comment that this is illusory.

Response:  We have amended disclosure accordingly.

Comment 5:                           With respect to Proposal III, is there any integration of shares sold on multiple days?

Response:  No.  Please see response to Comment 4.

2

Comment 6:                           Please note that it seems that there is erroneous disclosure on page 32 of the proxy statement under Brian Oswald’s signature.

Response:  We are unable to view any such erroneous disclosure.

*                                         *                                         *                                         *

3

If you have any questions or comments or require any additional information in connection with the above, please telephone Brian Oswald at (212) 792-2259.

Sincerely,

Prospect Capital Corporation

/s/ Brian H. Oswald

Name: Brian H. Oswald

Title: Chief Financial Officer, Chief Compliance Officer, Treasurer and   Secretary

Steven Grigoriou
Skadden, Arps, Slate,
  Meagher & Flom LLP
Four Times Square
New York, New York 10036- 6522
 Re:       Prospect Capital Corporation (the “Fund”)
             File  Numbers 814- 00659 & 333- 183530
       Dear Mr. Grigoriou:
             On August 24, 2012, the Fund filed a registration statement on Form N -2 under the
Securities Act of 1933 (“Securities Act”).   Your letter of even date requested expedited review
consis tent with the terms of Securities Act Release No. 6510 (February 15, 1984).  With certain
exceptions, we have lim ited our review of the filing.  The Fund is a business development
company  ("BDC")  regulated under the Investment Company Act of 1940 (“1940 Ac t”).  With
this filing the Fund may offer from time to time on a delayed basis , pursuant to Rule 415 under
the Securities Act, the Fund’s common stock, preferred stock, debt securities, subscription rights,
warrants , or units.  The filing is intended to re place the Fund’s current shelf registration
statement and, accordingly, it has been submitted pursuant to the requirements of Rule 415(a)(6) under the Securities Act.

Our comments regarding the filing are set forth below.

General
 1.  The shelf includes units which are unspecified combinations of other securities.  Please
add an undertaking to the effect that the Fund will not sell any units until after the Fund has filed a reviewable post -effective amendment under §8(c) of the Securit ies Act and each such filing has
been accelerated by the staff.

Later related disclosure captioned “Description of Our Units” states that: “We may issue
units comprised of one or more of the other securities described in this prospectus in any combinatio n.  Each unit may also include debt obligations of third parties, such as U.S. Treasury
securities.  Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit.  Thus, the holder of a unit will have the  rights and obligations of a
holder of each included security.”  Explain to the staff whether, to your knowledge, other funds or entities have offered similar units, whether such other units have been offered off the shelf, whether the units will be offere d at below net asset value, whether such offerings will involve a
pooling of interests, whether the Fund may be subject to any continuing liability to holders of such units, whether the units will be rated, whether third party securities may include deriva tives,

commodities or structured products, and the material risks related to the various groupings of
underlying securities, including any market or liquidity risks.
 Last of all, confirm that the unit agreement governing the units will be filed, clarify
whether each unit issuance or unit series issuance will be based on a unique agreement, and that the applicable prospectus supplement will be updated to reflect the circumstances of each unit offering.
 2. Please state in your response letter the procedur e to be followed to obtain FINRA review
and clearance of the filing, including the form of prospectus supplements regarding the Fund’s contemplated offerings.
 3. As disclosed throughout the filing, the Fund may offer from time to time on a delayed
basis t he Fund’s common stock, preferred stock, debt securities, subscription rights, warrants , or
units.  Either provide draft supplements for the various  offerings or add appropriate disclosure to
the current filing.
4. The prospectus discloses in several locations that the Fund may enter into  derivative
transactions.  Please disclose all material derivative investments in the prospectus.  In this regard, see The Letter to Karrie McMillan, Esq., General Counsel, Investment Company Institute,
Derivatives -Related Disclosures by Investment Companies  (July 30, 2010).  Please disclose
specifically why and when the Fund will invest in derivatives, distinguish the risks of purchasing and selling derivatives and disclose the creditworthiness standards the  Fund will employ when
selecting counterparties.

5. Please see the U.S. Securities and Exchange Commission, A Plain English Handbook
(1998).  Please review and revise the disclosure where it appears necessary so as to assure conformity with the Commission ’s plain English requirements.  For example, disclose the
meaning of the following terms used in various places throughout the document: middle market company, mezzanine debt or mezzanine loan, and balance sheet liquidity.  Lastly, clarify the industry ref erred to by the highlighted clause in the following sentence: “ From our inception to
the fiscal year ended June 30, 2007, we invested primarily in industries related to the industrial/energy  economy. ”

Prospectus Cover

6. Delete or revise the highlighted clause appearing in the following statement: “ Investing in
our Securities involves a heightened risk of total loss of investment and is subject to risks .”

Prospectus

PROSPECTUS SUMMARY
The Offering  (Page 3)

7. The third paragraph discusses the previous instances of shareholder approval of the
Fund’s authority to sales securities at a price below current net asset value.  Please reformat the
discussion chronologically or explain why the information is best presented by discussing the

approval out of sequence, i.e., by discussing 2008 after discussing such approvals in 2011 and
2012.

Fees and Expenses (Page 6)
 8. Revise the fee and expense table as follows:
 i)    reformat  the fee table consistent with Item 3, Form N -2 requirement s,
ii)   clarify whether one or both components of the incentive fee are “pre -incentive fee”
calculations, and
iii)   add disclosure indicating that the 2% of gross assets calculation will result in a fee based, at least in part, on assets borrowed for purposes that are unrelated to the Fund’s investment activities.
RISK FACTORS
Risks Relating To Our Operation as A Business Development Company  Securitization of our assets subjects us to variou s risks. (Page 26)

9. Add the clause as indicated to the following disclosure: “ We refer to the term securitize
to describe a form of leverage under which a company such as the Fund (sometimes referred to
as an "originator" or "sponsor") . . . ”

Our investments in foreign securities may involve significant risks in addition to the risks
inherent in U.S. investments. (Page 30)
 10. If the Fund will engage in any currency derivatives in connection with its foreign
securities investments, add appropr iate strategy and risk disclosure.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could
deter takeover attempts and have an adverse impact on the price of our common stock. (Page 35)

In discussing the Fund’s anti -takeo ver provisions it is said that: “ Our Board of Directors
is authorized to create and issue new series of shares, to classify or reclassify any unissued shares of stock into one or more classes or series, including preferred stock  . . .”  This disclosure
reserves  the right to create multiple series and classes .  Section 18(f)(2) and Rule 18f -2, which
permit multiple classes, only apply to open- end funds. The Fund should revise the disclosure  or
otherwise confirm that it will not avail itself of the provision without exemptive relief.

BUSINESS
Our Investment Objective and Policies (Page 83)

11. Add the substance of the disclosure in the first two paragraphs to the summary.
 12. The fourth paragraph indicates that the Fund’s 30% bucket may include investments in
CLO pools.  If appropriate, add disclosure regarding the liquidity of these investments, that such

investments may subject shareholders to duplicative fees, that these sec urities are rated as or are
equivalent to junk bonds and, if accurate, that the Fund may invest in such issuer from emerging
market countries.

DESCRIPTION OF OUR DEBT SECURITIES (Page 139)

13. The prospectus in the third paragraph states that the Fund h as filed the form of indenture
with the SEC.  Advise the staff when the Fund will file a Form T -1.

Part C – Item 34

14. Add undertakings to this item to the affect that:

a. the Fund undertakes to file a post -effective amendment containing a prospectu s
pursuant to §8(c) of the Securities Act prior to any offering by the Fund of its common stock  below net asset value, and
 b. the Fund undertakes to file a post -effective amendment containing a prospectus
pursuant to §8(c) of the Securities Act prior to  any offering by the Fund of rights to
subscribe for shares.

*        *          *          *          *          *          *          *          *          *          *

            We note that portions of the filing are incomplete.   We may have addit ional comments on
such portions when you complete them in a pre -effective amendment, on disclosures made in
response to this letter, on information supplied in your response letter, or on exhibits added in any pre -effective amendments.
            Whene ver a comment is made in one location, it is considered applicable to all similar
disclosure appearing elsewhere in the registration statement.
            Response to this letter should be in the form of a pre -effective amendment filed pursuant
to Rule 472 under the Securities Act.  Where no change will be made in the filing in response to a comment, please indicate this fact in your response letter and briefly state the basis for your position.  Where changes are made in response to our comments provide i nformation regarding
the nature of the change and, if appropriate, the location of such new or revised disclosure in the amended filing.   As required by the rule, please insure that you mark new or revised disclosure to
indicate change.
             Please advise us if you have submitted or expect to submit an exemptive application or no-action request in connection with your registration statement.
             You should review and comply with all applicable requirements of the federal securities laws i n connection with the preparation and distribution of a preliminary prospectus.

            We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filings reviewed by the staff to be certain that they have provided all information investors
require for an informed decision.  Since the Fund and its management are in possession of all facts relating to the Fund’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.              In the event the Fund requests acceleration of the effective date of the pending
registration statement, it should furnish a letter, at the time of such request, acknowledging that

• the Fund is responsible for the adequacy and a ccuracy of the disclosure in the
filing;
• should the Commission or the staff, acting pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from taking any
action with respect to the filing;
• the action of the Com mission or the staff, acting pursuant to delegated authority,
in declaring the filing effective, does not relieve the Fund from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and
• the Fund may not assert this action a s a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.

 In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Investment Management in connection
with our review of your filing or in response to our comments on your filing.

            We will consider a written request for acceleration of the effective date of the registration statement as confirmati on of the fact that those requesting acceleration are aware of their
respective responsibilities.
             Should you have any questions regarding this letter, please contact me at (202) 551-6976.                                                                                        Sincerely,
                                                                                     _____________                                                                                     Larry L. Greene
                                                                                    Senior Counsel
 Thursday, September 20, 2012

CORRESP
1
filename1.htm

October 26, 2012

VIA EDGAR

Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

Registration   Statement (File No. 333-183530) of

Prospect Capital   Corporation (the “Company”)

Dear Mr. Greene:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on October 26, 2012 so that it may become effective by 10:00 a.m. (New York time) on October 29, 2012 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Brian H. Oswald

Name:

Brian H. Oswald

Title:

Chief Financial   Officer, Chief Compliance Officer, Treasurer and Secretary

CORRESP
1
filename1.htm

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES SQUARE

NEW YORK 10036-6522

FIRM/AFFILIATE OFFICES

TEL: (212) 735-3000

FAX: (212) 735-2000

BOSTON

www.skadden.com

CHICAGO

HOUSTON

DIRECT DIAL

LOS ANGELES

212-735-2790

PALO ALTO

DIRECT FAX

SAN FRANCISCO

917-777-2790

WASHINGTON, D.C.

rprins@SKADDEN.COM

WILMINGTON

BEIJING

BRUSSELS

FRANKFURT

HONG KONG

October 26, 2012

LONDON

MOSCOW

MUNICH

PARIS

SÃO PAULO

SHANGHAI

SINGAPORE

SYDNEY

TOKYO

TORONTO

VIENNA

VIA EDGAR

Mr. Larry Greene

Senior Counsel

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:          Registration Statement (333-183530) of
 Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

We are in receipt of comments from you by phone on October 10, 2012 (the “Comments”) to Brian H. Oswald of the Company regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered the Comments and has authorized us to make on its behalf the responses and changes to the Company’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 3 to the Company’s Registration Statement being filed today.

The Company’s responses to the Comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.

Mr. Larry Greene

October 26, 2012

Page 2

Comments

1.  In the section titled “Business—Board Leadership Structure,” please disclose why the Company does not have a lead independent director.

The Company has included the following disclosure:

“The Company’s Board of Directors does not currently have a designated lead independent director. Instead, all of the independent directors play an active role on the Board of Directors. The independent directors compose a majority of the Company’s Board of Directors, and are closely involved in all material board level deliberations related to the Company. The Board of Directors believes that, with these practices, each independent director has an equal stake in the Board’s actions and oversight role and equal accountability to the Company and its stockholders.  The Company believes that Eugene Stark acts as the de facto lead independent director, by virtue of his role as an accounting expert and Chairman of the Audit Committee.”

2.   Please disclose how the Company intends to value the various components of a unit, including the value of common stock that is offered at a discount to net asset value.

No specific type of unit or the terms thereof have been identified by the Company.  Therefore, the Company does not know and is unable to disclose how it would value the various components of any particular unit.  Prior to the offering of any units not previously described in a registration statement declared effective by the Staff, and in accordance with the undertaking requested by the Staff (set out below as reference and included in the Registration Statement), the Company will file a reviewable Registration Statement that would, among other things, delineate the Company’s estimate of the value of the various components of the unit being registered, including any discount allocable to the common stock component. The Company believes that process will provide adequate disclosure and an opportunity for Staff review and that any attempt to do so now would be uninformative and likely inaccurate.

“The Registrant undertakes that it will not sell any units consisting of combinations of securities that have not previously been described in a registration statement of the Registrant or an amendment thereto that was subject to review by the Commission and that subsequently became effective.”

*              *              *              *              *

Mr. Larry Greene

October 26, 2012

Page 3

The Company has not and does not expect to submit an exemptive application or no-action request in connection with the Registration Statement.  If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (416) 777-4727.

Sincerely,

/s/ Richard Prins

Richard Prins

CORRESP
1
filename1.htm

SKADDEN,   ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES   SQUARE

NEW YORK   10036-6522

FIRM/AFFILIATE

OFFICES

TEL: (212)   735-3000

FAX: (212)   735-2000

BOSTON

www.skadden.com

CHICAGO

HOUSTON

DIRECT DIAL

LOS ANGELES

212-735-2790

PALO ALTO

DIRECT FAX

SAN FRANCISCO

917-777-2790

WASHINGTON, D.C.

rprins@SKADDEN.COM

WILMINGTON

BEIJING

BRUSSELS

FRANKFURT

HONG KONG

LONDON

MOSCOW

MUNICH

October 5, 2012

PARIS

SÃO PAULO

SHANGHAI

SINGAPORE

SYDNEY

TOKYO

TORONTO

VIENNA

VIA EDGAR

Mr. Larry Greene

Senior Counsel

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:          Registration Statement (333-183530) of
 Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

We are in receipt of accounting comments from Christian Sandoe dated September 27, 2012 (the “Comment Letter”) to Steven Grigoriou of Skadden, Arps, Slate, Meagher & Flom LLP regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”) as well as comments from you by phone on September 27, 2012 regarding the Registration Statement.

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Company’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 2 to the Company’s Registration Statement being filed today.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.

We urge the Staff to review these responses at its earliest convenience, as the Company has exhausted its existing shelf registration statement and has a considerable backlog of investment opportunities.

Mr. Larry Greene

October 5, 2012

Page 2

Accounting Comments

1.  Describe how Energy Solutions, and its predecessor Gas Solutions, are structured for legal and tax purposes. Are these entities corporate tax payers or pass-through vehicles for tax purposes?

Energy Solutions Holdings, Inc. (“Energy Solutions”) is a Delaware corporation formed on September 2, 2004, and a taxable C-corporation (“C-Corp”) for federal income tax purposes.  Energy Solutions was formerly named Gas Solutions Holdings, Inc. (“Gas Solutions”).  Prior to the reorganization, Gas Solutions owned 100% of each of Gas Solutions GP LLC (“Gas GP”) and Gas Solutions LP LLC (“Gas LP”), both of which were Delaware limited liability companies that were pass-through entities for federal income tax purposes. Gas GP owned 1% and Gas LP owned 99% of Gas Solutions II Ltd., a Texas limited partnership (“Gas Ltd”), which was treated as a pass-through entity for federal income tax purposes. This entity structure was established to help ensure that the Company would be able to maintain its regulated investment company status under Section 851 of the Internal Revenue Code (the “Code”), which, among other things, requires that at least 90% of its gross income consist of interest, dividends, gain on the sale of securities and related sources.  This entity structure was in place since the Company made its initial investment in Gas Solutions in 2004.

The Company owned and continues to own several groups of companies engaged in different energy sector businesses, including natural gas gathering and processing, coal mining, electricity generation from renewable biomass fuels, and offshore energy supply vessel services.  Prior to the reorganization, the Company’s energy sector businesses were managed on a decentralized basis, primarily at the local level, without a unified plan of operation.  Without centralized management executing a comprehensive and unified business financing and operating plan, these groups of companies demanded significant unscheduled amounts of the Company’s most senior management time.  Without integration, sharing of resources and scale, less than optimal results of operations resulted for each of these companies.  To make the operations of these energy sector portfolio companies more efficient and effective, the Company reorganized its energy sector portfolio companies, consolidating them under Gas Solutions/Energy Solutions.  The Company began planning a potential reorganization in the fourth quarter of 2010 and completed the reorganization in the fourth quarter of 2011.

The four groups of companies involved in the reorganization were the coal mining group of companies, comprising before the reorganization six separate entities (the “Yatesville Coal Group”), the biomass electrical generating power group

Mr. Larry Greene

October 5, 2012

Page 3

of companies (which include an idled power plant in Maine), comprising before the reorganization seven separate entities (the “Change Clean Energy Group”), the offshore energy supply vessel group of companies, comprising before the reorganization five separate entities (the “Freedom Marine Group”), and the natural gas gathering and processing plant group of companies, comprising before the reorganization four separate entities (the “Gas Solutions Group,” and together with the Yatesville Coal Group, the Change Clean Energy Group, the Freedom Marine Group and the Gas Solutions Group, the “Energy Groups”).

On December 1, 2011, Energy Solutions formed Yatesville Coal Holdings, LLC (“Yatesville Coal LLC”), Change Clean Energy Holdings, LLC (“Change Clean Energy LLC”) and Freedom Marine Holdings, LLC (“Freedom Marine LLC”), three Delaware limited liability companies treated as pass-through entities for federal income tax purposes, for the purposes of consolidating the Energy Groups under Energy Solutions.

Prior to the reorganization, the Yatesville Coal Group consisted of a group of five corporations and one limited liability company.  Yatesville Coal Holdings, Inc. (“Yatesville”), a Delaware corporation, and Genesis Coal Corporation (“Genesis”), a Kentucky corporation, were each owned 100% by the Company.  E & L Construction, Inc. (“E & L Construction”), a Kentucky corporation, C & A Construction, Inc. (“C & A Construction”), a Kentucky corporation, and East Kentucky Coal Holdings, Inc. (“East Kentucky”), a Delaware corporation, were each owned 100% by Yatesville.  North Fork Collieries LLC, a Delaware limited liability company, was owned 100% by East Kentucky.  For federal income tax purposes, all of the corporations were C-Corps and the limited liability company was treated as a pass-through entity.

In the first step of the reorganization related to the Yatesville Coal Group, on December 9, 2011, each of Genesis, E & L Construction, C & A Construction and East Kentucky merged with and into Yatesville, with Yatesville the surviving entity.  The mergers were intended to qualify as tax-free reorganizations within the meaning of Section 368(a) of the Code.

Prior to the reorganization, the Change Clean Energy Group consisted of a group of five corporations and two limited liability companies.  Change Clean Energy Holdings, Inc. (“CCEH”), a Delaware corporation, Change Clean Energy, Inc. (“CCEI”), a Delaware corporation, Worcester Energy Co., Inc. (“WECO”), a Maine corporation, and Worcester Energy Holdings Inc. (“WEHI”), a Delaware corporation, were each owned 100% by the Company.  DownEast Power Company, LLC (“DEPC”), a Delaware limited liability company, was owned 100% by CCEH.

Mr. Larry Greene

October 5, 2012

Page 4

Precision Logging & Landclearing, Inc. (“PLL”), a Delaware corporation, was 100% owned by CCEI.  BioChips LLC, a Maine limited liability company, was 51% owned by WEHI.  For federal income tax purposes, all of the corporations were C-Corps, and all of the limited liability companies were treated as pass-through entities.

In the first step of the reorganization, which related to the Change Clean Energy Group, on December 1, 2011, the Company formed New CCEI, Inc. (“New CCEI”), a Delaware corporation, and the Company contributed 100% of the equity of CCEI held by the Company to New CCEI.  Following this contribution, on December 5, 2011, CCEI was converted into a Delaware limited liability company treated as a pass-through entity for federal income tax purposes.  On December 9, 2011, each of CCEH, WECO and WEHI merged with and into New CCEI, with New CCEI the surviving entity, and PLL merged with and into CCEI, with CCEI being the surviving entity.  The contribution and conversion of CCEI and the foregoing mergers were intended to qualify as tax-free reorganizations within the meaning of Section 368(a) of the Code.

Prior to the reorganization, the Freedom Marine Group consisted of a group of one corporation and four limited liability companies.  Freedom Marine Holding, Inc. (“Freedom Marine”), a Delaware corporation, was owned 100% by the Company.  Jettco Marine Services LLC (“Jettco”) was owned 86.78% (fully diluted) by Freedom Marine.  Jettco owned three Louisiana limited liability companies, each of which owns an offshore energy supply vessel operating in the Gulf of Mexico.  For federal income tax purposes, the corporation was a C-Corp and the limited liability companies were treated as pass-through entities.  Energy Solutions and the Freedom Marine business since the reorganization have made additional investments in acquiring and expanding the technological and operational capability of offshore energy supply vessels in the Gulf of Mexico.  As part of the reorganization and comprehensive business plan, the Company has recently made additional investments in Freedom Marine, enabling Freedom Marine to purchase a vessel with a satellite-enhanced dynamic positioning system (“DPS”) and to retrofit existing vessels with DPS, significantly enhancing the operational capability and competitiveness of Freedom Marine. The Company made the investments in connection with the reorganization and might not have made such investments absent the reorganization.

On December 9, 2011, after the initial steps of the reorganization described above, including all of the mergers described above, the final steps of the reorganization were taken in which:

Mr. Larry Greene

October 5, 2012

Page 5

·                  Freedom Marine merged with and into Freedom Marine LLC, with Freedom Marine LLC the surviving entity;

·                  Yatesville merged with and into Yatesville Coal LLC, with Yatesville Coal LLC the surviving entity; and

·                  New CCEI merged with and into Change Clean Energy LLC, with Change Clean Energy LLC the surviving entity.

Each of these mergers was intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code.

On December 20, 2011, Gas Solutions changed its name to Energy Solutions Holdings Inc. to reflect the diverse nature of its energy sector businesses.

Charts illustrating the corporate structure and tax status of the entities involved in the reorganization before and after the reorganization are attached hereto as Exhibit A and Exhibit B, respectively.

On January 4, 2012, Gas GP and Gas LP sold their interests in Gas Ltd to an unaffiliated third party, with the result that Energy Solutions continued to own miscellaneous direct assets, such as propane contracts and cash transferred from Gas Ltd to Gas Solutions prior to January 4, 2012, and the entities set forth on Exhibit B as subsidiaries in energy businesses.

As a result of the reorganization, the energy businesses now indirectly owned by Energy Solutions benefit from a comprehensive business, financing, and operating plan designed to implement efficient and effective operations, support scale growth, and provide centralized financing, with one chief financial officer/controller and one capital budget, each at the corporate parent level.  Energy Solutions is constantly evaluating energy opportunities, including with respect to the coal and biomass businesses.

Building on the reorganization and comprehensive business plan for Energy Solutions, Energy Solutions has recently made additional investments in Freedom Marine, enabling Freedom Marine to purchase a vessel with a DPS and to retrofit existing vessels with DPS, significantly enhancing the operational capability and competitiveness of Freedom Marine.  Freedom Marine is operating four offshore vessels and has been steadily improving operating results since the reorganization.

2.  Describe how the transfers of assets (CCEHI, CCEI, Freedom Marine and Yatesville) to Energy Solutions by the Company were accounted for both

Mr. Larry Greene

October 5, 2012

Page 6

under US GAAP and for federal tax purposes, including appropriate authoritative support. Did the accounting for these transfers have any impact on the sale of assets by Energy Solutions in 2012, and if so, how.

All of the mergers (they were not asset transfers) were structured to qualify as tax-free reorganizations within the meaning of Section 368(a) of the Code.  As a result, no gain or loss was recognized in connection with the reorganization, and the pre-existing tax basis of the assets of each entity involved in the reorganization, as well as the pre-existing tax attributes (including net operating losses, or “NOLs”) of each such entity, were inherited by Energy Solutions for federal income tax purposes.

From a US GAAP standpoint, the interests in the merging companies owned by the Company were transferred with no gains or losses recognized on the transfer.  Moving the investments from one controlled entity to another is not a substantive event and does not result in any gain or loss being realized.

The mergers pre-dated the sale of the interests in Gas Ltd by Gas GP and Gas LP, and accounting for the mergers did not have any impact on such sale, nor did the sale have any impact on accounting for the mergers from either a US GAAP or tax perspective.

3.  Please explain why the Energy Solutions distribution should be treated as a dividend subject to the income incentive fee calculation in Section 3(b)(i) of the advisory contract.

The Energy Solutions distributions must be treated as dividends subject to the income incentive fee calculation in Section 3(b)(i) of the advisory contract instead of a capital gain subject to the capital gain incentive fee calculation in Section 3(b)(ii) of the advisory contract because the sale of Gas Ltd generated taxable earnings and profits for Energy Solutions, and Energy Solutions has dividended a portion of such earnings and profits to the Company in the 2012 Company fiscal year.

The American Institute of CPAs (“AICPA”) Investment Companies Audit and Accounting Guide (the “AICPA Guide”), the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 946-20-50-8 and the Glossary Guide define dividends as pro rata payments to shareholders from taxable earnings and profits.  Return of capital, by comparison, is defined in the AICPA Guide as distributions in excess of taxable earnings and profits.  Capital gains would be reported once all capital invested has been returned.  Since the distributions from Energy Solutions to the Company were sourced from taxable earnings and profits, such distributions must be treated and reported by the

Mr. Larry Greene

October 5, 2012

Page 7

Company for federal income tax purposes as dividends consisting of ordinary income, as required by Sections 301 and 316 of the Code.

4.  Please explain why the Energy Solutions distribution should not be treated as a realized capital gain subject to calculation under Section 3(b)(ii) of the advisory contract.

Energy Solutions is the corporate parent of a variety of operating businesses in the energy sector as described in response to comment 1.  Accordingly, it is excluded from the definition of investment company under Section 3(a) of the 1940 Act.  Energy Solutions is also excluded from the definition of investment company under FASB ASC 946-10-20 because its business purpose and activity includes mak

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
INVESTMENT MANAGEMENT
September 27,2012
Steven Grigoriou
Skadden, Arps, Slate,
Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Re: Prospect Capital Corporation (the "Company")
File Number 814-00659
Dear Mr. Grigoriou:
On August 22, 2012 Prospect Capital Corporation (814-659)
("Company") filed a Form 10-K for the year ended June 30, 2012 ("10-K").
We have the following comments on that filing.
Background
In December 2011, the Company completed a reorganization of Gas
Solutions Holdings, Inc., a wholly owned portfolio company ("GSHI"),
renaming it Energy Solutions and transferring ownership of its equity
interests in other operating companies with the stated intent of strategically
expanding the operations of Energy Solutions across energy sectors. As part
of this reorganization, the Company transferred its equity interests in
Change Clean Energy Holdings, Inc. ("CCEHI") and Change Clean Energy,
Inc. ("CCEI"), Freedom Marine Holding, Inc. ("Freedom Marine") and
Yatesville Coal Holdings, Inc. C'Yatesville") to Energy Solutions Holdings Inc.
(f/k/a Gas Solutions Holdings Inc.) ("Energy Solutions").
On Januàry 4, 2012, Energy Solutions sold its gas gathering and
processing assets ("Gas Solutions") for a sale price of $199,805,000
adjusted for the final working capital settlement, including a potential
earnout of $28,000,000 that will be paid based on the future performance of
Gas Solutions. We believe that it is the Company's intent to maintain the
loans to and investment in Energy Solutions, as Energy Solutions will
apparently continue as a portfolio company.
The Company received a distribution of $33,250,000 from Energy
Solutions which was recorded as dividend income during the quarter ended

"
June 30, 2012. During the year ended June 30, 2012, the Company states
that the main driver of the increase in investment income is primarily the
result of a larger income producing portfolio and the deployment of
additional capital in revenue-producing assets through increased origination
and increased dividends and other income received from Energy Solutions,
First Tower and NRG.
The Company received dividends from NRG of $15,011,000 and
$3,600,000 during the years ended June 30, 2012 and June 30, 2011,
respectively and it received dividends from Energy Solutions of $47,850,000
and $9,850,000 during the years ended June 30, 2012 and June 30, 2011,
respectively. The incentive fee calculations1 include a net investment
income incentive fee with such base appearing to be approximately
i Item 3(b) of the advisory agreement filed by the Company in its N-2 on July 6, 2004 (333-114552)
provides that the Incentive Fee shall consist of two parts, as follows:
(i) One part will be calculated and payable quarterly in arrears based on the pre-Incentive Fee
net investment income for the immediately preceding calendar quarter. For this purpose, pre-
Incentive Fee net investment income means interest income, dividend income and any other income
(including any other fees, such as commitment, origination, structuring, diligence and consulting fees
and fees for providing significant managerial assistance or other fees that the Corporation receives
from portfolio companies) accrued by the Corporation during the calendar quarter, minus the
Corporation's operating expenses for the quarter (including the Base Management Fee, expenses
payable under the Administration Agreement, and any interest expense and dividends paid on any
issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee net
investment income includes, in the case of investments with a deferred interest feature (such as
original issue discount, debt instruments with payment-in-kind interest and zero coupon securities),
accrued income that the Corporation has not yet received in cash. Pre-Incentive Fee net investment
income does not include any realized capital gains, realized capital losses or unrealized capital
appreciation or depreciation. Pre-Incentive Fee net investment income, expressed as a rate of return
on the value of the Corporation's net assets at the end of the immediately preceding calendar quarter,
will be compared to a "hurdle rate" of 1.75% per quarter (7% annualized). The Corporation will pay
the Adviser an Incentive Fee with respect to the Corporation's pre-Incentive Fee net investment
income in each calendar quarter as follows; (1) no Incentive Fee in any càlendar quarter in which the
Corporation's pre-Incentive Fee net investment income does not exceed the hurdle rate; (2) 100% of
the Corporation's pre-Incentive Fee net investment income with respect to that portion of such pre-
Incentive Fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in
any calendar quarter (8.75% annualized); and (3) 20% of the amount of the Corporation's pre-
Incentive Fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75%
annualized). These calculations will be appropriately pro rated for any period of less than three
months and adjusted for any share issuances or repurchases during the current quarter.
(ii) The second part of the Incentive Fee (the "Capital Gains Fee") will be determined and
payable in arrears as of the end of each calendar year (or upon termination of this Agreement as set
forth below), commencing on December 31, 2004, and will equal 20.0% of the Corporation's realized
capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized
capital depreciation at the end of such year; provided that the Incentive Fee determined as of
December 31, 2004 will be calculated for a period of shorter than twelve calendar months to take into
account any net realized capital gains, if any, computed net of all realized capital losses and unrealized
capital depreciation for the period ending December 31, 2004. In the event that this Agreement shall
terminate as of a date that is not a calendar year end, the termination date shall be treated as though
it were a calendar year end for purposes of calculating and paying a Capital Gains Fee.
2

$233,351,000 for the year ended June 30, 2012 (based on net investment
income of $186,684,000 plus the $46,671,000 income incentive fee and
multiplying that total by 200/0).
Thus, it appears that shareholders apparently paid a 200/0 income
incentive fee on the $47,850,000 dividend paid by Energy Solutions. It
appears that the dividend may have been paid at least in part with proceeds
from the sale of Gas Solutions by Energy Solutions, a wholly owned portfolio
company. It appears that the Gas Solutions sale transferred .most of the
operating assets of Energy Solutions that it held before the reorganization.
We further note that there have been no capital gains incentive fees paid
pursuant to Section 3(b )(ii) of the advisory contract for the three years
ended June 30, 2012, June 30, 2011 and June 30, 2010.
Page 86 of the annual report states that "(tJhe sale of Gas Solutions
by Energy Solutions has resulted in significant earnings and profits, as
defined by the Internal Revenue Code, at Energy Solutions for calendar year
2012. As a result, distributions from Energy Solutions to us will be required
to be recognized as dividend income, in accordance with ASC 946, Financial
Services-Investment Companies, as cash distributions are received from
Energy Solutions to the extent there are current year earnings and profits
sufficient to support such recognition". Presumably, the treatment of the
distribution by Energy Solutions to the Company as a dividend subjects the
distribution to the income incentive fee described in Section 3(b)(i) of the
advisory contract.
Page 145 of the Company's 10-K states that (with dollar amounts in
thousands) :
Energy Solutions has indemnified us against any legal action arising from its
investment in Gas Solutions, LP. We have incurred approximately $2,093 from the
inception of the investment in Energy Solutions through June 30, 2012 for fees
associated with a legal action, and Energy Solutions has reimbursed us for the entire
amount. There were no such legal fees incurred or reimbursed for the year ended June
30, 2012 and June 30, 2011.
Additionally, certain other operating expenses incurred by us which are
attributable to Energy Solutions have been reimbursed by Energy Solutions and are
reflected as dividend income: control investments in the Consolidated Statements of
Operations. For the years ended June 30, 2012, June 30, 2011 and June 30, 2010,
such reimbursements totaled as $16,236, $5,704 and $6,944, respectively (emphasis
added).
The Company's Energy Solutions positions2 are presented on the 10-K
Schedule of Investments as a Level 3 Control Investment (250/0 or greater
2 Footnote (8) states that "(dJuring the quarter ended December 31, 2011, our ownership of Change
Clean Energy Holdings, Inc. ("CCEHI") and Change Clean Energy, Inc. ("CCEI"), Freedom Marine
3

voting control). The positions show an aggregate cost of $63,245,000 with
an aggregate current value of $126,868,000 as of June 30, 2012. The
operations of Energy Solutions are not consolidated with the Company.
Page 93 of the Company's 10-K states "(oJur June 30, 2012 and June 30,
2011 financial statements include our accounts and the accounts of Prospect
Capital Funding, LLC, our only wholly-owned, closely-managed subsidiary
that is also an investment company. All intercompany balances and
transactions have been eliminated in consolidation".
Discussion
The staff requests that the dividend paid by Energy Solutions and the
reorganization transaction and asset sale be explained in a written response
letter filed on EDGAR.
1. Describe how Energy Solutions, and its predecessor Gas Solutions, are
structured for legal and tax purposes. Are these entities corporate tax
payers or pass-through vehicles for tax purposes?
2. Describe how the transfers of assets (CCEHI, CCEI, Freedom Marine
and Yatesville) to Energy Solutions by the Company were accounted for both
under US GAAP and for federal tax purposes, including appropriate
authoritative support. Did the accounting for these transfers have any
impact on the sale of assets by Energy Solutions in 2012, and if so, how.
3. Please explain why the Energy Solutions distribution should be treated
as a dividend subject to the income incentive fee calculation in Section
3(b)(i) of the advisory contract.
4. Please explain why the Energy Solutions distribution should not be
treated as a realized capital gain subject to calculation under Section 3(b )(ii)
of the advisory contract.
5. Please discuss the immediate financial difference and any long-term
financial difference, if any, to the Company's shareholders with respect to
any incentive payment under 3 and/or 4 above.
6. If the difference between an income incentive fee calculation and a
realized capital gain incentive fee calculation is material, discuss the Board
of Directors' role in oversight and their awareness of this issue (specifically
including the independent directors). Does structuring portfolio transactions
Holding, Inc. ("Freedom Marine") and Yatesville Coal Holdings, Inc. ("Yatesville") was transferred to
Energy Solutions Holdings Inc. (f/k/a Gas Solutions Holdings Inc.) ("Energy Solutions") to consolidate
all of our energy holdings under one management team. We own 100% of Energy Solutions".
4

for dividends (as opposed to realized capital gains) present any advisory
conflict, and if so, how is such conflict monitored to safeguard shareholder
interests? Are the proceeds from the sale of the Gas Solution assets the
source of the dividend payment the Company received?
7. Provide an accounting analysis under US GAAP for the conclusion to
account for the make-whole payment of $26,936,000 received for the sale of
NRG as interest income.
8. Fully explain both the federal tax treatment and the GAAP accounting
treatment regarding the Gas Solutions sale and all payments as they apply
to Energy Solutions, the Company, and the Company's shareholders.
9. Discuss when negotiations for the Gas Solutions sale started and
whether the December 2011 reorganization was contemporaneous with such
negotiations.
10. Disclose the management team of Energy Solutions, and if any are
affiliated persons, describe their compensation and the source of such
compensation.
11. What are the specific assets owned by Energy Solutions/Gas Solutions
Holdings, Inc. immediately prior to, and immediately after the December
2011 reorganization? Include a description of the specific Gas Solutions
Holdings, Inc. assets remaining, if any, after the Gas Solutions sale, and
excluding cash or receivables from such sale.
Assuming the reorganization did not take place and that the Gas
Solutions assets were still sold for the same price, would there have been
any difference with respect to the amount or accounting treatment of the
dividend payment to the Company? Would there have been any change to
the amount of incentive fee payable to the adviser? If so, were the
Company's directors informed about these transactions and were they made
aware that such transactions would have an impact on the incentive fee to
be paid to the adviser?
12. Did the Gas Solutions sale dispose of most of the assets that were
originally held by Gas Solutions Holdings, Inc. immediately prior to the
reorganization?
13. What is the prospectus disclosure of the potential conflict between the
advisor and the Company regarding the structuring of its investments in
control investments and the impact on any potential incentive fees payable
5

by the Company and its shareholders? See comments 3 and 4 above.
Where is this disclosure located?
14. Did the Company pay an income incentive fee to the advisor for any
expenses reimbursed to it by Energy Solutions, and if so, why? In addition,
please explain (including authoritative support) why reimbursement of such
operating expenses is appropriately accounted for as dividend income.
15. What is the cautionary prospectus disclosure with respect to the
sustainability/reliability of portfolio company "dividends" that are received by
the Company that occur due to the sale of portfolio company capital assets.
Where is such disclosure located?
16. Future interest/dividend presentations by the Company should be
appropriately qualified and/or quantified as needed in light of the comments
in this letter.
17. State whether any of the comments in this letter with respect to the
Energy Solutions situation presents a similar issue for First Tower and/or
NRG, or any other portfolio company.
18. Provide an accounting analysis under US GAAP for the conclusion not
to consolidate Energy Solutions, its predecessor Gas Solutions, First Tower
of Delaware, and any other wholly-owned subsidiaries.
19. Pursuant to Article 3-09 of Regulation S-X, discuss whether the
financial statements of Energy Solutions, its predecessor Gas Solutions, First
Tower of Delaware, NRG or any majority wholly-owned subsidiaries are
required to be filed with the financial statements of the Company.
20. Pursuant to Article 4-08(g) of Regulation S-X, discuss whether
summarized financial information of Energy Solutions, its predecessor Gas
Solutions, First Tower of Delaware, NRG or any subsidiaries are required to
be included in the notes to the financial statements of the Company.
21. Please confirm that while not immediately paid, capital gain incentive
fees are accrued during the periods when unrealized appreciation is recorded
on the Company's books and records with respect to the portfolio. Thus,
capital gain incentive fee accruals will be matched with the corresponding
unrealized capital appreciation (and depreciation) for the portfolio so that
future investors do not bear the entire capital gain incentive fee accrual in
the period of sale. Please explain the relationship of the capital ga

CORRESP
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SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES SQUARE
   NEW YORK 10036-6522

FIRM/AFFILIATE OFFICES

TEL: (212) 735-3000

BOSTON

FAX: (212) 735-2000

CHICAGO

www.skadden.com

HOUSTON

LOS ANGELES

DIRECT DIAL

PALO ALTO

212-735-2790

SAN FRANCISCO

DIRECT FAX

WASHINGTON, D.C.

917-777-2790

WILMINGTON

rprins@SKADDEN.COM

BEIJING

BRUSSELS

FRANKFURT

HONG KONG

LONDON

September 25,   2012

MOSCOW

MUNICH

PARIS

SÃO PAULO

SHANGHAI

SINGAPORE

SYDNEY

TOKYO

TORONTO

VIENNA

VIA EDGAR

Mr. Larry Greene

Senior Counsel

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:

Registration Statement (333-183530) of

Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

We are in receipt of comments from you dated September 20, 2012* (the “Comment Letter”) to Steven Grigoriou of Skadden, Arps, Slate, Meagher & Flom LLP regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Company’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 1 to the Company’s Registration Statement being filed today.

* Received on September 21, 2012.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response.

General

1.  The shelf includes units which are unspecified combinations of other securities. Please add an undertaking to the effect that the Fund will not sell any units until after the Fund has filed a reviewable post-effective amendment under §8(c) of the Securities Act and each such filing has been accelerated by the staff.

The Company has included the following undertaking in Item 34 of the Registration Statement:

“The Registrant undertakes that it will not sell any units consisting of combinations of securities that have not previously been described in a registration statement of the Registrant or an amendment thereto that was subject to review by the Commission and that subsequently became effective.”

This is the form of undertaking provided by Apollo Investment Corporation, which had its registration statement declared effective on September 14, 2012.

Later related disclosure captioned “Description of Our Units” states that: “We may issue units comprised of one or more of the other securities described in this prospectus in any combination. Each unit may also include debt obligations of third parties, such as U.S. Treasury securities. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.” Explain to the staff whether, to your knowledge, other funds or entities have offered similar units, whether such other units have been offered off the shelf, whether the units will be offered at below net asset value, whether such offerings will involve a pooling of interests, whether the Fund may be subject to any continuing liability to holders of such units, whether the units will be rated, whether third party securities may include derivatives, commodities or structured products, and the material risks related to the various groupings of underlying securities, including any market or liquidity risks.

2

To the Company’s knowledge, no other business development company has offered units; however, Ares Capital Corporation, Apollo Investment Corporation and BlackRock Kelso Capital Corporation, among others, have included similar disclosure for units in their recent shelf registration statements.  Inasmuch as specific types of units have not yet been identified and will be subject to further review in accordance with the undertaking set out above, the Company believes, as did Ares Capital Corporation, Apollo Investment Corporation and BlackRock Kelso Capital Corporation, that it is not possible to discuss particular types of units at this time.

Last of all, confirm that the unit agreement governing the units will be filed, clarify whether each unit issuance or unit series issuance will be based on a unique agreement, and that the applicable prospectus supplement will be updated to reflect the circumstances of each unit offering.

The Company will file each unit agreement governing the units in a post-effective amendment. The applicable prospectus supplement will be updated to reflect the circumstances and terms of each unit offering.

2.  Please state in your response letter the procedure to be followed to obtain FINRA review and clearance of the filing, including the form of prospectus supplements regarding the Fund’s contemplated offerings.

The Company expects to file the Registration Statement, including all forms of prospectus supplements, with FINRA for same day clearance shortly following the filing of Pre-Effective Amendment No. 1 to the Registration Statement.

3.  As disclosed throughout the filing, the Fund may offer from time to time on a delayed basis the Fund’s common stock, preferred stock, debt securities, subscription rights, warrants, or units. Either provide draft supplements for the various offerings or add appropriate disclosure to the current filing.

The Company has included in the Registration Statement forms of prospectus supplements for common stock, preferred stock, warrants, subscription rights, debt securities, and units.  These are the most likely securities to be offered.  The Company may, of course, offer more than one type of security at the same time in the same prospectus supplement which would differ from a prospectus supplement for only a single type of security, just as the terms of the Company’s various offerings of debt securities differ from prospectus supplement to prospectus supplement.

3

4.  The prospectus discloses in several locations that the Fund may enter into derivative transactions. Please disclose all material derivative investments in the prospectus. In this regard, see The Letter to ‘Karrie McMillan, Esq., General Counsel, Investment Company Institute, Derivatives-Related Disclosures by Investment Companies (July 30, 2010). Please disclose specifically why and when the Fund will invest in derivatives, distinguish the risks of purchasing and selling derivatives and disclose the creditworthiness standards the Fund will employ when selecting counterparties.

The Company has not engaged in derivative or hedging transactions and has no current intention to engage in such transactions.  However, the Company does have the ability to engage in such transactions.  As such, the Company directs your attention to the risk factor in the Registration Statement, “We may expose ourselves to risks if we engage in hedging transactions.”  The Company believes the risk factor is comprehensive and effectively states the risks of the Company engaging in hedging transactions, including derivatives.  For ease of reference, the risk factor is copied below.

“We may expose ourselves to risks if we engage in hedging transactions.

We may employ hedging techniques to minimize certain investment risks, such as fluctuations in interest and currency exchange rates, but we can offer no assurance that such strategies will be effective. If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

4

Furthermore, our ability to engage in hedging transactions may also be adversely affected by recent rules adopted by the CFTC.

The success of our hedging transactions depends on our ability to correctly predict movements, currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. The degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies. The Company has no current intention of engaging in any of the hedging transaction described above, although it reserves the right to do so in the future.”

5.  Please see the U.S. Securities and Exchange Commission, A Plain English Handbook (1998). Please review and revise the disclosure where it appears necessary so as to assure conformity with the Commission’s plain English requirements. For example, disclose the meaning of the following terms used in various places throughout the document: middle market company, mezzanine debt or mezzanine loan, and balance sheet liquidity. Lastly, clarify the industry referred to by the highlighted clause in the following sentence: “From our inception to the fiscal year ended June 30, 2007, we invested primarily in industries related to the industrial/energy economy.”

The Company has included the following disclosure regarding the definition of “middle market company” under Prospectus Summary on page 2 of the Registration Statement and Business on page 83 of the Registration Statement:  “In this prospectus, we use the term “middle-market” to refer to companies with annual revenues between $50 million and $2 billion.”  The Company has already defined the meaning of mezzanine debt as debt that is “subordinated to senior loans and is generally unsecured” under Business on page 83 of the Registration Statement and has added disclosure under Prospectus Summary on page 3 of the Registration

5

Statement.  The Company believes that the term “balance sheet liquidity” is plain English.  The Company refers you to page 34 of the U.S. Securities and Exchange Commission, A Plain English Handbook (1998), where the term “liquidity” is used in an example, thus having a plain English meaning.

The Company has added disclosure to describe the industrial/energy economy.

Prospectus Cover

6.  Delete or revise the highlighted clause appearing in the following statement: “Investing in our Securities involves a heightened risk of total loss of investment and is subject to risks.”

The Company has revised disclosure accordingly.

Prospectus

PROSPECTUS SUMMARY

The Offering (Page 3)

7.  The third paragraph discusses the previous instances of shareholder approval of the Fund’s authority to sales securities at a price below current net asset value. Please reformat the discussion chronologically or explain why the information is best presented by discussing the approval out of sequence, i.e., by discussing 2008 after discussing such approvals in 2011 and 2012.

The Company has revised disclosure accordingly.

Fees and Expenses (Page 6)

8.  Revise the fee and expense table as follows:

i)      reformat the fee table consistent with Item 3, Form N-2 requirements,

The Company has revised disclosure accordingly.

ii)     clarify whether one or both components of the incentive fee are “pre-incentive fee” calculations, and

6

The Company’s disclosure states that the incentive fee on income other than capital gains is pre  incentive fees.  The Company has added disclosure to the effect that the capital gain incentive fee is paid without regard to pre incentive-fee income.

iii)   add disclosure indicating that the 2% of gross assets calculation will result in a fee based, at least in part, on assets borrowed for purposes that are unrelated to the Fund’s investment activities.

The Company has revised disclosure accordingly.

RISK FACTORS

Risks Relating To Our Operation as A Business Development Company

Securitization of our assets subjects us to various risks. (Page 26)

9.  Add the clause as indicated to the following disclosure: “We refer to the term securitize to describe a form of leverage under which a company such as the Fund (sometimes referred to as an “originator” or “sponsor”) . . .”

The Company has revised the disclosure accordingly.

Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.  (Page 30)

10.  If the Fund will engage in any currency derivatives in connection with its foreign securities investments, add appropriate strategy and risk disclosure.

The Company has not used currency derivatives and has no current intention of using currency derivatives in connection with any foreign securities investments.  The Company also directs your attention to its response to comment 4 regarding the Company’s disclosure of the risks to engaging in hedging transactions.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock (Page 35)

11.  In discussing the Fund’s anti-takeover provisions it is said that: “Our Board of Directors is authorized to create and issue new series of shares, to classify or reclassify any unissued shares of stock into one or more classes or series, including preferred stock . . .” This disclosure reserves the right to create multiple series and classes. Section 18(f)(2) and Rule 18f-2, which permit multiple classes, only apply to

7

open-end funds. The Fund should revise the disclosure or otherwise confirm that it will not avail itself of the provision without exemptive relief.

The disclosure is a statement of state law matters and not a statement of regulatory limits.  The Company accordingly believes the disclosure is accurate.  Further, the Company has added the following disclosure under “Regulation—Senior Securities:” “The 1940 Act allows BDCs to issue multiple series of the same class of preferred stock and to issue multiple classes in connection with certain refundings and reorganizations.”

BUSINESS

Our Investment Objective and Policies (Page 83)

12.  Add the substance of the disclosure in the first two paragraphs to the summary.

The Company has revised disclosure accordingly.

13.  The fourth paragraph indicates that the Fund’s 30% bucket may include investments in CLO pools. If appropriate, add disclosure regarding the liquidity of these investments, that such investments may subject shareholders to duplicative fees, that these securities are rated as or are equivalent to junk bonds and, if accurate, that the Fund may invest in such issuer from emerging market countries.

The Company has added the following disclosure:  “CLO investment

CORRESP
1
filename1.htm

September 25, 2012

VIA EDGAR
 Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

Registration   Statement (File No. 333-183530) of

Prospect Capital   Corporation (the “Company”)

Dear Mr. Greene:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on September 25, 2012 so that it may become effective by 4:00 p.m. (New York time) on October 1, 2012 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (416-777-4727) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital   Corporation

/s/ Brian H.   Oswald

Name: Brian H.   Oswald

Title: Chief Financial Officer, Chief Compliance Officer, Treasurer   and Secretary

CORRESP
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SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES SQUARE

NEW YORK 10036-6522

(212) 735-3000

Fax:  (212) 735-2000

http://www.skadden.com

August 24, 2012

Larry Greene

Division of Investment Management

Securities and Exchange Commission

Washington, D.C.  20549

RE:                              Prospect Capital Corporation

Dear Mr. Greene:

On August 24, 2012, Prospect Capital Corporation (the “Company”) filed a Registration Statement on Form N-2 (File No. 333-183530) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to Rule 415(a)(6) of the Securities Act, the Registration Statement, upon effectiveness, is intended to replace the Company’s current shelf registration statement (File No. 333-176637) (the “Current Shelf”).

The Company represents that the Registration Statement is substantially similar to its Pre-Effective Amendment No. 2, filed October 18, 2011, to the Current Shelf and that the only substantive changes made to the disclosure contained in Pre-Effective Amendment No. 2 to the Current Shelf are as follows:

·                  In addition to common stock, preferred stock, debt securities and warrants, the Company included subscription rights and units in the Registration Statement.  Corresponding discussion of the security is included in the sections “Description of Our Subscription Rights” and “Description of Our Units” and relevant Risk Factors were added.

·                  Financial statements and the notes thereto, the MD&A, dividends declared by the Company, selected financial data, the Company’s portfolio companies and industries and other related factual updates were included in the base prospectus (as of the Company’s fiscal year end June 30, 2012) and, where

appropriate, in the form of prospectus supplement (as of the Company’s fiscal year end June 30, 2012).

·                  The risk factors portion of the Registration Statement was updated to reflect certain factual updates related to the Company, current regulatory conditions and current market conditions.

·                  Fees paid to the Company’s investment adviser and expense reimbursements paid to its administrator were updated.

·                  The Portfolio Companies chart was revised to show information as of June 30, 2012.

·                  The tax disclosure was revised slightly.

·                  Other minor factual updates.

As such, the Company hereby requests expedited review of its Registration Statement.  If you have any questions, please contact me at (416) 777-4727 or Richard Prins at (212) 735-2790.

Sincerely,

/s/ Steven Grigoriou

Steven Grigoriou

2

CORRESP
1
filename1.htm

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES SQUARE

NEW YORK 10036-6522

FIRM/AFFILIATE OFFICES

TEL: (212) 735-3000

BOSTON

FAX: (212) 735-2000

CHICAGO

www.skadden.com

HOUSTON

LOS ANGELES

PALO ALTO

DIRECT DIAL

SAN FRANCISCO

212-735-2790

WASHINGTON, D.C.

DIRECT FAX

WILMINGTON

917-777-2790

rprins@SKADDEN.COM

BEIJING

BRUSSELS

FRANKFURT

HONG KONG

LONDON

MOSCOW

October 18, 2011

MUNICH

PARIS

SÃO PAULO

SHANGHAI

SINGAPORE

SYDNEY

VIA EDGAR

Mr. Larry Greene

Senior Counsel

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:          Registration Statement (333-176637) of
 Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

We are in receipt of oral comments provided by you on October 13, 2011 regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”).

The Company has considered your comments and has authorized us to make on its behalf the responses and changes to the Company’s Registration Statement discussed below.  These changes are reflected in Pre-Effective Amendment No. 2 to the Company’s Registration Statement.

The Company’s responses to the comments are set forth below.  For ease of reference, a summary of each comment is set forth in italics and followed by the corresponding response.

General

1.  Please amend the undertaking regarding units in the Registration Statement to state that the Company will not sell any units until after the Company has filed a reviewable post-effective amendment under §8(c) of the Securities Act and each such filing has been accelerated by the staff.

The Company has decided to remove units from its Registration Statement.

Prospectus Cover

2.  Please provide disclosure regarding types of units the Company may issue, how the units fit within the capital structure requirements of §§18 and 61 of the 1940 Act and the risks associated with the units.

The Company has decided to remove units from its Registration Statement.

Prospectus

3.  Disclosure captioned “Prospectus Summary — The Investment Adviser” states, in connection with discussing the payment of the investment advisory fee, that: “we have agreed to pay Prospect Capital Management investment advisory fees, which will consist of an annual base management fee based on our gross assets, which we define as total assets without deduction for any liabilities . . ..”  Please clarify whether the advisory fee based upon both borrowings for leverage and all other Fund liabilities.

The disclosure has been amended to clarify the calculation of the management fee by including the emphasized addition to the sentence below:

“Under an investment advisory and management agreement between us and Prospect Capital Management, or the Investment Advisory Agreement, we have agreed to pay Prospect Capital Management investment advisory fees, which will consist of an annual base management fee based on our gross assets, which we define as total assets without deduction for any liabilities (and, accordingly, includes the value of assets acquired with proceeds of borrowings), as well as a two-part incentive fee based on our performance.”

2

4.  Revise Footnote 5 of the fees and expense table to indicate, if accurate, that the Fund has no intent to borrow more than the $400 million referenced therein in the upcoming year.

The Company has revised the disclosure to state that it has no intent to borrow more than $1.0725 billion in the upcoming year.  The fees and expense table has been adjusted accordingly.

5.  Under the sub-caption “Risk Factors — Most of our portfolio investments are recorded at fair value . . .,” please disclose that the Company does not have a liquidity policy.

The requested disclosure has been made and investors are advised to see the Risk Factor “The lack of liquidity in our investments may adversely affect our business.”

*                                         *                                         *                                         *                                         *

3

The Company has not and does not expect to submit an exemptive application or no-action request in connection with the Registration Statement.  If you have any questions or comments or require any additional information in connection with the above, please telephone the undersigned at (212) 735-2790 or Steven Grigoriou at (212) 735-2482.

Sincerely,

/s/ Richard Prins

Richard Prins

4

CORRESP
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October 18, 2011

VIA EDGAR

Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

Registration   Statement (File No. 333-176637) of

Prospect Capital   Corporation (the “Company”)

Dear Mr. Greene:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on October 18, 2011 so that it may become effective by 4:00 p.m. (New York time) on October 19, 2011 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (212-735-2482) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital   Corporation

/s/ Brian H.   Oswald

Name: Brian H.   Oswald

Title: Chief Financial Officer, Chief Compliance Officer, Treasurer   and Secretary

CORRESP
1
filename1.htm

October 7, 2011

VIA EDGAR
 Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:                               Registration Statement (File No. 333-176637) of
  Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on October 7, 2011 so that it may become effective by 8:00 a.m. (New York time) on October 12, 2011 or as soon thereafter as practicable.

The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does nor foreclose the Commission from taking any action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may not assert the action as a defense to any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou (212-735-2482) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

/s/ Brian H.   Oswald

Name:

Brian H. Oswald

Title:

Chief Financial   Officer, Chief Compliance Officer, Treasurer and Secretary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
INVESTMENT MANAGEMENT
Steven Grigoriou
Skadden, Ars, Slate,
Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Re: Prospect Capital Corporation (the "Fund")
File Numbers 814-00659 & 333-176637
Dear Mr. Grgoriou:
On September 1, 2011, the Fund filed a registration statement on Form N-2 under
the Securities Act of1933 ("Securities Act"). Your letter dated September 8,2011,
followed the filing and requested expedited review consistent with the term of Securities
Act Release No. 6510 (February 15, 1984). With certain exceptions, we have limited our
review of the filing. The Fund is a business development company ("BDC") regulated
under the Investment Company Act of 1940 ("1940 Act"). The filing registers the
offering, pursuant to Rule 415 under the Securities Act, ofthe Fund's common and
preferred stocks, warants and debt securities. The filing is intended to replace the
Fund's current shelf registration statement and, accordingly, it has been submitted
pursuant to the requirements of Rule 415(a)(6) under the Securities Act.
Our comments regarding the filing are set forth below.
General
1. The shelf includes units which are unspecified combinations of other securities.
Please add an undertaking to the effect that the Fund wil not sell any units until after the
Fund has filed a reviewable post-effective amendment under §8(c) of the Securities Act
and each such filing has been accelerated by the staff
Later related disclosure captioned "Description of Our Units" states that: "We
may issue units comprised of one or more ofthe other securities described in this
prospectus in any combination. Each unit may also include debt obligations of third
paries, such as U.S. Treasury securities. Each unit wil be issued so that the holder of the
unit is also the holder of each security included in the unit. Thus, the holder of a unit wil
have the rights and obligations ofa holder of each included security." Explain to the staff
whether, to your knowledge, other funds or entities have offered similar units, whether
Lac: ComputcrIPC0l912201 I
10/612011-3,)6,29 PM

such other units have been offered off the shelf, whether the units wil be offered at
below net asset value, whether such offerings wil involve a pooling of interests, whether
the Fund may be subject to any continuing liability to holders of such units, whether the
units wil be rated, whether the thid pary securities may include derivatives,
commodities or structured products, and the material risks related to the various
groupings ofunderlying securities, including any market or liquidity risks.
Last of all, confi that the unit agreement governing the units wil be filed,
clarify whether each unit issuance or unit series issuance wil be based on a unique
agreement, and that the applicable prospectus supplemerit wil be updated to reflect the
circumstances of each unit offering.
Prospectus Cover
2. The caption lists "Units" as one of the instruments to be offered under this
registration statement. Delete this disclosure or fully describe how the units fit within the
capital structure requirements of §§18 and 61 of the 1940 Act. Disclose all the ttrms and
limitations. Further, describe how these instruments are valued.
3. Disclosure in the fist paragraph indicates that the Fund may offer various types
of securities from time to time "in one or more offerings or series." Later disclosure
captioned "Description of Our Capital Stock" states that: "Under our charer, our Board
of Directors is authoried to classify and reclassify any unissued shares of stock into
other classes or series of stock, and to authorize the issuance of such shares, without
obtaining stockholder approvaL." (Emphasis added.) The Board may also increase or
decrease the aggregate number of shares of stock or the number of shares of stock of any
class or series that the Fund has authority to issue. Disclose in the prospectus that the
Fund wil only take these actions consistent with § § 18 and 61 of the 1940 Act. Also
summarize the basic limitations under these provisions.
4. The second paragraph discloses that the Fund may offer its shares at a discount to
net asset value. Disclose how much discount to net asset value was authoried by
shareholders and how long this authority lasts.
Prospectus
5. Disclosure captioned "Prospectus Summary - The Investment Adviser" states, in
connection with discussing the payment ofthe investment advisory fee, that: "we have
agreed to pay Prospect Capital Management investment advisory fees, which wil consist
of an annual base management fee based on our gross assets, which we define as total
assets without deduction for any liabilities . . .." Is the advisory fee based upon both
borrowings for leverage and all other Fund liabilities? Revise the disclosure to exclude
non-leverage borrowings, or disclose that the advisory fee increases as a result of any
debt or liability.
Loe: Compula-IPCC09JiiOI i
10/61201l-B6,29 PM

6. Disclose on the prospectus cover the matters discussed in the second and third
sentences ofthe third paragraph under the sub-caption "The Offering," which begins with
the clause: "At our 2010 anual meeting, held on December 10, 2010, our stockholders
approved. . .." The fourth sentence of that paragraph discusses the 2008 shareholder
approval of the Fund's ability to issue warants, options and rights to acquire its common
stock over an unlimited time period. Confi that the policy satisfies the various
limitations of §61 (a) of the 1940 Act, including the requirements that such issuance
expire withi ten years, that the exercise price be not less than current market value and
that the resultant voting securities not exceed 25% of the Fund's outstanding voting
securities.
7. Revise the fee table as follows:
i) the Management Fee and Incentive Fee line items should be presented with one
total, however, that item may have two components,
ii) the three interest payment line items should appear as sub-totals of an item;
we suggest "Leverage/Interest Expense,"
iii) revise Footnote 5 to indicate, if accurate, that the Fund has no intent to
borrow more than the $400 millon referenced therein in the upcomig year,
iv) with respect to Footnote 6, explain why the Fund annualized the incentive
fees paid for the fourth fiscal quarer, ~, was the fee higher or lower durig that
period, and
v. with respect to the Fund's ability to issue preferred, add a line item regarding
preferred expenses, estimating such expenses for the upcomig year, or add a .
statement that the Fund has no intent to issue preferred durig the year.
8. The sub-caption "Risk Factors - Most of our portfolio investments are recorded at
fair value. . ." indicates that a significant portion of the Fund's portfolio wil be iliquid.
Disclose the Fund's liquidity policy, including, if applicable, the miimum amount that
must be invested in liquid securities.
9. The caption "Description of Our Debt Securities" discloses that: "The description
below is a summary with respect to future debt securities we may issue and not a
summary of the Notes. Please see 'Business-General-Notes' for a description ofthe
Notes." Explain to the staffwhy these discussions are separated in this manner.
10. The prospectus states that the Fund wil fie the form 0 f the indenture with the
SEC prior to the commencement of any debt offering, at which time the form of
indenture would be publicly available. File the indenture as a pre-effective amendment to
this registration statement and advise the staff when the Fund wil fie a Form T -1.
** * * * * * * * * *
We note that portions of the filing are incomplete. We may have additional
comments on such portions when you complete them in a pre-effective amendment, on
disclosures made in response to this letter, on information supplied in your response
letter, or on exhbits added in any pre-effective amendments.
Loe: ComputcrlPCC091220l L
10/61201 i -3 ,)6,29 PM

Whenever a comment is made in one location, it is considered applicable to all
similar disclosure appearing elsewhere in the registration statement.
Response to this letter should be in the form of a pre-effective amendment fied
pursuant to Rule 472 under the Securities Act. Where no change wil be made in the
filing in response to a comment, please indicate this fact in your response letter and
briefly state the basis for your position. Where changes are made in response to our
comments provide information regarding the nature of the change and, if appropriate, the
location of such new or revised disclosure in the amended filing. As required by the rule,
please insure that you mark new or revised disclosure to indicate change.
Please advise us if you have submitted or expect to submit an exemptive
application or no-action request in connection with your registration statement.
You should review and comply with all applicable requirements of the federal
securities laws in connection with the preparation and distribution of a preliminary
prospectus.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the fiings reviewed by the staff to be certain that they have provided all
information investors require for an informed decision. Since the Fund and its
management are in possession of all facts relating to the Fund's disclosure, they are
responsible for the accuracy and adequacy ofthe disclosures they have made.
In the event the Fund requests acceleration of the effective date ofthe pending
registration statement, it should furnish a letter, at the time of such request,
acknowledging that
. the Fund is responsible for the adequacy and accuracy of the disclosure in
the filing;
. should the Commssion or the staff acting pursuant to delegated authority,
declare the fiing effective, it does not foreclose the Commission from
taking any action with respect to the filing;
· the action of the Commission or the staff acting pursuant to delegated
authority, in declaring the filing effective, does not relieve the Fund from
its full responsibility for the adequacy and accuracy of the disclosure in
the filing; and
· the Fund may not assert this action as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division ofInvestment Management in
connection with our review of your filing or in response to our comments on your fiing.
Lac: ComputcrIPCC091ii01 i
10/612011-3:36,29 PM

We wil consider a written request for acceleration ofthe effective date ofthe
registration statement as confiation of the fact that those requesting acceleration are
aware of their respective responsibilities.
Should you have any questions regarding this letter, please contact me at (202)
551-6976.
Sincerely,
Thursday, October 06,2011
Loc: ComputaIPCC091iioi1
10/61201 1-3,)6:29 PM

CORRESP
1
filename1.htm

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

FOUR TIMES SQUARE

NEW YORK 10036-6522

(212) 735-3000

Fax:  (212) 735-2000

http://www.skadden.com

September 8, 2011

Larry Greene

Division of Investment Management

Securities and Exchange Commission

Washington, D.C.  20549

RE:      Prospect Capital Corporation

Dear Mr. Greene:

On September 1, 2011, Prospect Capital Corporation (the “Company”) filed a Registration Statement on Form N-2 (File No. 333-176637) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to Rule 415(a)(6) of the Securities Act, the Registration Statement, upon effectiveness, is intended to replace the Company’s current shelf registration statement (File No. 333-170724) (the “Current Shelf”).

The Company represents that the Registration Statement is substantially similar to its Pre-Effective Amendment No. 3, filed March 14, 2011, to the Current Shelf and that the only substantive changes made to the disclosure contained in Pre-Effective Amendment No. 3 to the Current Shelf are as follows:

·                  In addition to common stock, preferred stock, debt securities and warrants, the Company included units in the Registration Statement.  Corresponding discussion of the security is included in the section “Description of Our Units.”

·                  The Company’s board of directors has approved a base indenture for the Company, which was filed with the Registration Statement as Exhibit (d)(2).  A description of all the material terms of the base indenture was included in the Registration Statement in the section “Description of Our Debt Securities.”

·                  Financial statements and the notes thereto, the MD&A, dividends declared by the Company, selected financial data, the Company’s portfolio companies and industries and other related factual updates were included in the base prospectus (as of the Company’s fiscal year end June 30, 2011) and, where appropriate, in the form of prospectus supplement (as of the Company’s fiscal year end June 30, 2011).

·                  The risk factors portion of the Registration Statement was updated to reflect certain factual updates related to the Company, current regulatory conditions and current market conditions.  Specifically, the Company has deleted risk factors regarding its investments in the energy and energy related industries as it no longer has a significant concentration in such industries.

·                  Fees paid to the Company’s investment adviser and expense reimbursements paid to its administrator were updated.

·                  The Portfolio Companies chart was revised to show information as of June 30, 2011.

·                  The tax disclosure was revised slightly.

·                  Other minor factual updates.

As such, the Company hereby requests expedited review of its Registration Statement.   If you have any questions, please contact me at (212) 735-2482 or Richard Prins at (212) 735-2790.

Sincerely,

/s/ Steven Grigoriou

Steven Grigoriou

2

CORRESP
1
filename1.htm

corresp

March 14, 2011

VIA EDGAR

Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

         Re:

    Registration Statement (File No. 333-170724) of

Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

     In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of
1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-2 filed on March 14, 2011 so that it may become effective by 8:00
a.m. (New York time) on March 16, 2011 or as soon thereafter as practicable.

     The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of
the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does nor foreclose the Commission from taking any
action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant
to delegated authority, in declaring the filing effective, does not relieve the Company from its
full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may
not assert the action as a defense to any proceeding initiated by the Commission or any person
under the federal securities laws of the United States.

     The Company hereby requests that you notify Richard Prins (212-735-2790) or Steven Grigoriou
(212-735-2482) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration
Statement has been declared effective.

    Very truly yours,

Prospect Capital Corporation

    /s/ Brian H. Oswald

    Name:
    Brian H. Oswald

    Title:
    Chief Financial Officer, Chief Compliance Officer,
Treasurer and Secretary

CORRESP
1
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corresp

February 4, 2010

VIA EDGAR

Larry Greene, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

         Re:

    Registration Statement (File No. 333-170724) of

Prospect Capital Corporation (the “Company”)

Dear Mr. Greene:

     In accordance with Rule 461 of the General Rules and Regulations under the Securities Act of
1933, as amended, the Company hereby requests acceleration of Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-2 filed on February 4, 2011 so that it may become effective by
4:30 p.m. (New York time) on February 8, 2011 or as soon thereafter as practicable.

     The Company hereby acknowledges that: (1) it is responsible for the adequacy and accuracy of
the disclosure in the filing; (2) should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does nor foreclose the Commission from taking any
action with respect to the filing; (3) the action of the Commission or the staff, acting pursuant
to delegated authority, in declaring the filing effective, does not relieve the Company from its
full responsibility for the adequacy and accuracy of the disclosure in the filing; and (4) it may
not assert the action as a defense to any proceeding initiated by the Commission or any person
under the federal securities laws of the United States.

     The Company hereby requests that you notify Richard Prins (212-735-2790) or Carmine Lekstutis
(212-735-2132) of Skadden, Arps, Slate, Meagher & Flom LLP by telephone once the Registration
Statement has been declared effective.

Very truly yours,

Prospect Capital Corporation

    /s/ Brian H. Oswald

    Name: Brian H. Oswald

    Title:   Chief Financial Officer, Chief Compliance Officer,

Treasurer and Secretary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSlqN
WASHINGTON, D.C.20S49
DIVISION OF
INVESTMENT MANAGEMENT
Carne Lekstutis, Esq.
Skadden, Ars, Slate,
Meagher & Flom LLP
Four Times Squae
New York, New York 10036-6522
Re: Prospect Capital Corporation (the "Ftid")
File Numbers 814-00659 & 333-164270
Dear Mr. Lekstutis:
On November 19, 2010, the Fund filed a registration statement on Form N-t:"
under the Securities Act of 1933 ("Securities Act"). Your letter ofeveadate :~if¡~
. accompaned the filing. Your letter requests limited review in accoi:dapce withS!~MPties
Act Release No. 6510 (Februar 15, 1984). With certin exceptions, wè have lii1:êd our
review of the filing. Th~ Fund is a business development company ("BDC") regiated
under the Investment Company Act of 1940 ("1940 Act"). The filing registers the
offering, pursuant to Rule 415 under the Securties Act, of the Fund's common and,.
preferred stocks, debt securties and warants. The filing is intended to replace the
Fund's current shelf registration statement and, accordingly, it has been submitted
pursuant to the requirements of Rule 415(a)(6) under the Securities Act.
Our comments regarding the filing are set forth below.
General
1. We remind the Fund of its obligation to file electronic reports with respectto its
fidelity bond coverage under Rule 17 g-1 (g) under the 1940 Act. .. .
2. In light of disclosure under the caption "Risk Factors - Risks Relating To Our
Investment" regarding the Fund's contemplated investments in derivative instreits, .
confirm that the Fund's derivatives disclosure reflects the observations set fort ia,the
recent letter from Bar Miler, Associate Director in the Division oflnyestmentÚ'ti.r "
Management to the Investment Company Intitute. In sumar, you. should pr9-~~~' ""~'"
more understandable disclosure on this topic to investors. Funds are enaollagta.,p,focuš
disclosure on actual anticipated operations rather than investments thàtileyoognt'wake.
, :.-- ,.-::",.FW1ds are also instrcted to tailor their strategy discussion, not as genercstatertats of
policy, rather they are to describe the specific instrents in which the fud invèst~()r
wil invest principally, and to tailor the risk disclosure to reflect the types ofderi'Vatives
used, and the extent of and the purposes of such use. See Letter toKare McMiHap
Lò Co_IPC121620lORPFD
1/1312011-3:15:05 PM:'.0 .'c-',.',
'm~~t~~
..~.,(. .

". . : -''-'''~-_.._- _". ," , ": ,; -.:. "'. :'. " -'. .':::' , _,;.., --; ',:-:- :."': _,"- ,-,.~_:;::;:--) " :"-'-";~':~'t".:i.~",~it':: _..-."""'~"~"-'
Esq., General Counsel, Investment Company Intitúte, Dervatives:'Re1äted Disêlošûres'
by Investment Companes (July 30, 2010).
3. The fee table on the facing page discloses, the amount of shares being registered.
Confirm that shares to be used to fulfill over-allotments are included in the sharesneing
registered.
4. Although the Fund is classified as a non-diversified C?mpany, several references
appear in the document indicating that the Fund contiues to diversify its portfolio or that
it is diversifyg its portfolio. For example, see disclosure captioned "Risk Factgrs -
Risks Relating to Our Investment." Please revise the disclosure. '
Prospectus Cover
5. Disclosure in the second paragraph references the Fund's intent to issue rights.
Disclosure in Par C of the filing discusses the Fund's intent to reoffer rights not taei
durng a rights offering. Revise the disclosure to reflect the. Fund'sintent to engagt':in
transferable and non-transferable rights offerigs, as well as the risks tas,narehQlqçi. ofthe former. ' ..
-. ":'i
. . ~- - . ".'." .' ~... ,.': . ,~.
," .::.:~::~Jt:~:1ti¥~~-~; ~
. -',
6. Disclosure captioned "Prospectu Sumar -c. The Offerig~d in.dicates tna(tn.e "'
Fund may sell common stock, or warants, options or rights to acqiiit~the Fund':S:~,~:,1J
common stock, at a price below the curent net asset value upon approvâloftheE~d's:
directors, including a majority of its independent directors, in certaincirçumstaç~š;'
Revise the disclosure to indicate, if accurate, that shareholders hav~apPro"eçtWsli2iicy,
the duration of that approval, and the maximunidisco'ut to net assetvahîtR(w1M~l1¡thê'Fund wil issue such shares. ' " .': :" :: jtitl3; :" at'. ,;-,: : , ,,'-~:".;
. ~3-i-~ ~. ::L":;;~:J£~;~ig:;:F
":" _ _ _' _ _ _ _ _ _ _. .' " ___. .:. ._,,"; _.,' _ -"/::')ô:;~_~().~.
7. Add disclosure that explains the securtization process more fuly and disclöse the
risks to Fund shareholders, with respect to the following highight~ disclosure appearng
under the caption "Risk Factors - Senior securties, including debt, expose us to ':"
additional risks, including the typical risks associated with leveragé": "We curentIy use
our revolving credit facilty to leverage our portfolio and we expect)nthe futue ~l;."
borrow from and issue senior debt securties to bans and other lendètsaridmaY:~f;S:
securitize certain of our portfolio investments." (Emphasis added.):" ",. ,;::tE'"i
'0 ,~'=i'.';,,: .~.;~¡. ,-~-r~1'~~.t¡' .r-
Also, add disclosure indicating:..'
,.,".
'i.," ~_-'
.):: i-'~~:..Gi_:,_.::.:-
· ' that the Fund's investments in or holdings of, paricipationsinsecurtizått~Îis,
wil not be included withi the Fund's investm~nt ineligibl~PQi-folio.C(mpfIies,
. . - .;:,.'~-: ! :;",:f-t ~~;-'L~;
. : :~ ":. ;.:, -'" ;.-- ,', ,..,.:" : - ;'- _:::;i:'ii
that the Fund wil invest or hold no more than 30% ofits ås~éts'in se.cunt! '
\, '(;~\: (¡ t '::;,'~/- t:
Lo CompQ'IPCI21620lORPFD
1111201 1-3:15:05 PM. " : ,',.,. ~. .: :;.:";:' i ",:~~.-~":. i- :'/"ix~:j
Ad~¡l¡£;ld,\fi~ltJ ey,.
-:':c
.;:::f":¡;'

.", '-, ~,' :_~: ',_";~~~;hi~~~G~':
in plai English, the salient characterstics of a "debtsecurtiation"and ë~plain ,,'
why the Fund may securtize loans, rather than sell them to;i:t1d par,';"/J;:r.::Wi-:"':
'. ;:.\~,; :~.:;'\:~.::"
. 'l~~:.lL.~:h~~~.' .
-, .'"~~:..
;-,'j--:,"7;- \i.:.;~; O'· the material differences betwee, and the consequences of, sellmg verus
securtization transactions. In the alternative, disclose that there are no materal
differences,
· all the materal risks of securtizations. Wil the Fund hold any residua or
subordinate interests?,
· all fees paid in connection with a securtization. Does the ádviser benefit from a
securtization arangement? Does the "sale" to a special purose vehicle or
subsidiar trgger any gains (or losses) that are subject to an incentive fee?, and
· how the securtization affects the two hundred percent asset coverage requirementunder the 1940 Act., .
,,'
-, ~,. ; - -", ¡-,".
Furer, advise the staff as to whether:
.;,: :.~~' .~':;~/, f
the statu under the 1940 Act of any slil?sidia.orspe5ialppr9~e vel191e,¡~~edfor
thepllose of securtizing Fund asse,ts.. ,wmllW:$libsi4iar.ot;:~PV IAake it '
private offerig.of debt securties, or will.itBè'a r~gi~tered offèrg under t:~
Securities Act? May that offering create the risk ,of liabilty to the Fund? ,atd
. :-,;,'", " "-;:";),' 3'-\--":'"\-:'-.-. :Tt.')
the Fund proposes to consolidate the fiancials9fthesecurti~tiÓn stib~ì'Jr~
with that of the Fund. .,' " '", ,.'" ":'/
. ,.
. .", ... .. ,..;'. . "._,'.',.,' .
9. Revise a subsequent sub-caption which'lJegis withthé phráS.~d'lailure,;to.~~tend
our existing credit facilty, which is curently scheduled to' expire: " '."oy disclösin~' the
fees the Fund incurs in connection with a credit facilty'~1dtl~;
10. Disclosure sub-captioned "We need to raise additional capital tngrow b~~~#Se we
must distrbute most of our income" states that: "W~ J:av~ sought additiona.l canlml,~py
borrowing from financial institutions and may issue debt securties, or addition~lt9Rity
securties. If we fail to obtain fuds from such s()ii~s or from other sources tod~dour
investments, we could be limited in our abilty to gro'Y;whichmayhave ana4ver~~
effect on the value of our common stock." (Emphciisadded) Expiahtle meånrtg of
the underlined clauseto the staff ' , " " ',d' "': ~', '"H'~i ",;,,'H\iz'
: j.~::~~.-:
i~l;-L't:
11. Disclosure sub-captioned "Potential conflctsofinterest coUldiipactolld:ft~~'
investment retus" states that: "In the courseofourinvestfg actiyiti~~;:undertl~'~tl:"\
Investment , Advisory Agreement we pay base ,man~gement and incentìy~IeFs t~;,~~Rspect
. , -' -; -'." - '-.~", - ":\~;':,\'~'~~~;i-.
Úl: CoÓJ,,1P121620lORPFD
imI2011-3:15:05 PP: '

Capital Management, and reimburse Prospect Capita Managementf()r'Certex~~es,it.", '
, incurs." (Emphasis added.) No such reimbursements or waivers me f(~ference in:the' "
expense table. It is unclear whether any such expenses are included under "Other ,
expenses." Confi that no reimbursements or waivers were incured by the Fund durg
the most recent fiscal year.
12. The sub-captioned disclosure which begis with the phrase "Our incentive fee
could induce Prospect. . ." discusses cer risk associated with the Fund's incentive fee.
The incentive fee has two components (realized gains and net income) which combine
with the base fee to form the total management fee paid to the Fund's advisor. As to each
component of that fee, at an appropriate location, disclose when it is determned, the
maner in which it is computed and when it is paid.
13. Disclosure with the caption that begins with the sentence "Capital markets have
recently been in a period of disruption ard instabilty. . ." discusses the recent period of
extreme market volatilty. In light of the Fund's abilty to invest in foreign secwiM~s, the
disclosure should refer as well to the curent uncety regarding cerain EurozQ.ït.. . .
countres and, if deemed appropriate or relevant, the recent incidentn~fered to by some
as the "flash crash."
Also, update the discussions appearng in thsdisc10sure andèls~wh~I'e.jIllWe" ,
filing regarding shareholder approval to sell below net asset value. ¡', i i/'v,;jcm'ixli
, 'Ù:-i"c",
14. The second paragraph of the discussion under the caption thaIbe.gjnswilktle ..
phrase "Reguations governg our operation.. ." discusses the Fund's abilty tpJSslle
, securities below net asset value. Revise that discussion to indicate the .aiount()tdillltion
allowed, i.e., the maximum limit or, if applicable, the absence of any limit, andil~r;~ffecton voting. . . ..., . '. ' , :.L ' d' t~k' ',:
.' " '. :. - '.,.. ~
15. The thrd paragraph of the discussion under thecaptioIi thafb~&ïs witilhe:T-
phrase "Reguations governg our operation. .." discloses that: '''o:sêcurtize"la~, we
may create a wholly owned subsidiar and contrbute a pool ofloantosuch sul?s~~tar.
This could include the sale of interests in the loans by the subsidiar ona non-r~Prse
basis to purchasers who we would expect to be wiling to accet a lowerdiiteresttatp to
invest in investment grade loan pools." Confi that these subsidiares wil heflaec
with whole loans, or whether they may include interests from other pools~ ahdaon:litm
that all such loans wil be rated. ',' ))1'¡1,;''; . -"';~
l.,~\P
16. If the Fund may invest in emerging or develqping market secllties, reyise,lle
discussion sub-captioned "Our investments in foreign securties may involve sign,lìcant
risks in addition to the risks inherent in U.S. investments" to indicate that facti. j~*l,;
'.-" - . " .'. J:,:'-~;;i_,-t. ";!~'.r":'ii'
1 7. Disclosure under the sub-caption that begis with the phrase "Pr()":sion~_Qf~e
Maryland General Corporation Law and of our charer and bylaws coui-d;deteni~iWtt... ..- " . "". - - " . : '"" ': ::," ~:- ;'-":
discloses the following: "Although our bylaws include such a provision,slicha;'ltgMÏsion
mayalso be amended or elimiated by our Board of Directors at aiytÏme in th~'ff~e,~", \' .''-' :",;" :::,r:'~:'~'~;;.:¥~T.~~:',
"
Lo CoIP12162010RPFD
11112011-3:15:0 PM
:' ,

;-".;'
provided that we wil notify the Division of Investnient Nlan~gement;flt!tl~~~ç .
amending or elimating this provision." It is the view of the stafftlat.gptig ~'FH ,.'.
, Marland Control Share Acquisition Act would,be,açting ina,manerÏß~~i.st~li!with,..
§ l8(i) of the 1940 Act The Fund should add disclosure to the above quoted disC1ösUre "
that reflects the staffs position. See Boulder Total Return Fund, Inc. (pub. avaiL. Nov.15,2010). ' ,
18. Update the "Senior Securties" table to reflect the latest issuace of convertible
debt. Indicate whether the expense table takes into account the Fund's recent issuace of
leverage.
19. Disclosure captioned "Regulation" indicates that the Fund may invest up to 10%,
of its assets in other investment companes. If the Fund may invest in unegistered fuds,
such as hedge fuds or fuds that do not fall under the definition of investment company
by virte of §3(c)(I) or §3(c)(7) of the 1940 Act, add appropriate strategy and risk
disclosure. In addition, if the Fund may invest in the. afore mentioned fuds, add ,i. .appropriate disclosure to the expense table. r* * * * * * * *.* *'*
:',. .' .;:t';ti::::We note that portions o.fthe filing are incomplete.\Vemayhávè'aa(1iti9ilã1~!' "J
comments on suçh portions when you completetherin å pre-effectiv,eaieG~~øfd?~)l
disclosures made in response to ths letter, on infötiation supplied in y-ol:rêspkna~' .
letter, or on exhbits added in any pre-effective ameidments. ". 'n~0\')'i¡i::'
~":'-.;if;:.I'\-i,
Whenever a comment is made in one location,it is considered applicable tqa11
similar disclosure appearg elsewhere in the registratIon statement.
".i.?'tJ.d:':i';', '. -,. ... - - - ,-- ..
Response to this letter should be in the fômi ora pr~-éffectiVêdanendmeit ,li!è '
pursuant to Rule 472 under the Securties Act. Wher~ nochange will1J~ 1l~g~in:lb~
filing in response to a comment, please indicate ths fact in your respons~ letter,antiti
briefly state the basis for your position. Where changes are made ihrespalise t~,~~:j' ..
comments provide information regarding the natue: of the change and,iF;à.pp~0iW~~, thé
location of such new or revised disclosure in the aiend~filing~AsreguirÇdn)dliçrule,
please insure that you mark new or revised disclosure tö, ildicate change.' ,", '," ht;t:d+'
;,/;d').;'"
Please advise us if you have submitted or expect to submit apexemptive
application or no-action request in connection with your regi;stration, statement.
You should review and comply with all applicable require:reJt~()ftle feCl~r~
securties laws in cOnnection with the preparation ana. 4istrbution9tá~relinR~10'.prospectus.,' ,',;;: ',,';;.:WL.,
'."~:'''~7-,;H 'C";';:: :;;.~~'i~'n~';;
We urge all persons who are responsible.föi:the äçcuracy and.ad,equ~cy¡gr:the
disclosure. in the filings reviewed by the staff to be cerai that they have proviq(xl~l
information investors require for an informeddecisio~.Sincethe Fund 'and its' 'i 'j" '
Lo: COmp..1P12162010RPFD
II112011-3:15:Q PM

.. :'..' ~ î. . _ -' ,~
::'--:". '-.: .:......,. . _.:--management are in p()s~ession. of all facts rtlatiKtalh~fup4"sqi~Çlg~C-,lllÇM(~~~i
responsible for the accuracy and adequacy of the disclosures they h~ve niáde. '~"~",:,-;,: ,
In the event the Fund requests acceleration of the effective date of the pending
registration statement, it should fush a letter, at the tie of such request,
acknowledging that '
· the Fund is responsible for the adequacy and accuracy ofthediscloswe in
the filing;
· should the Commssion or the staff acting pursuant to delegated authority,
declare the fiing effective, it does not foreclose the Commssion from
takng any action with respect to the filing;
· the action of the Commssion or the staff, acting pursuant to delegated
authority, in declarg the filing effective, does not relieve the Fund from
its full responsibilty for the adequacy and accuracy of the disclosure inthe fiing; and "",;i
· the Fund may not assert ths action as a,defense in an)'pr()çe~~ing~tiated
by the Commssion or any person under the federal s~9urtiesla'M~:!gf,the
United States. . ":";;
, ::. ::: . -,; ;:;.:r:_~"l::.
In addition, please be advised that the 'Divisioh or-Enforcer¿Ilth~ågM~~~;iôall
::.. ',_ "'.':_" ' . ..-. ,'_. ':'.. ,'.'.:"':"-',i';;","':"/"'-.:':'" "__,,,,_~,_,,:,:_:,:/,--,~:~:,-:,;y,,"¡:,:'_':'~'-"/:'.:_:'__::.d~,:.
information you provide

CORRESP
1
filename1.htm

    corresp.htm

PROSPECT CAPITAL CORPORATION

10 East 40th Street, 44th Floor

New York, New York 10016

September 10, 2010

VIA EDGAR

Kevin Rupert, Esq.

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

Re:

Prospect Capital Corporation

Preliminary Proxy Statement Filed on September 2, 2010

Dear Mr. Rupert:

We are in receipt of oral comments provided by you on September 7, 2010 to Carmine Lekstutis of Skadden, Arps, Slate, Meagher & Flom LLP regarding Prospect Capital Corporation's (the "Company") preliminary proxy statement filed on September 2, 2010.

We have considered your comments and have made the responses and amendments to the Company's proxy statement discussed below.  For ease of reference, we have included your comments below followed by our responses.  In addition, we confirm to you that the Company's 2010 proxy statement is substantially similar to the Company's 2009 proxy statement, except that the 2010 proxy statement includes a voting item for the ratification of auditors and also includes additional disclosure as required by recent proxy rule changes (i.e., the experience, qualifications, attributes and/or skills of the various directors, etc…).

Per your instructions, we are filing this response letter for your review prior to filing a revised proxy statement.  Please contact Rick Prins (212-735-2790) or Carmine Lekstutis (212-735-2132) to confirm that these responses are satisfactory and that we may proceed with filing our definitive proxy statement.  We would like to file the definitive proxy statement on September 17, 2010.

The Company acknowledges that: (1) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (2) staff comments or changes to

Prospect Capital Corporation

September 10, 2010

Page 2

disclosure in response to staff comments do not foreclose the Securities and Exchange Commission from taking any action with respect to the filing; and (3) the Company may not assert staff comments as a defense in any proceeding initiated by the Securities and Exchange Commission or any person under the federal securities laws of the United States.

Comments

Comment 1:   Please ensure that the information under "Security Ownership of Beneficial Owners and Management" is as of the most recent practicable date.

Response:  Your comment is noted.  The Company will provide the required information as of the most recent practicable date.

Comment 2:   Please include a statement that Mr. Graham D.S. Anderson's resignation from the Board of Directors was not as a result of a disagreement with the Company.

Response:  The following statement has been added under the section entitled "Proposal I: Election of Directors" in response to your comment:

Mr. Anderson’s resignation did not relate to any disagreements with the Board or management of the Company.

Comment 3:   The subsection in the proxy statement entitled "Corporate Governance—Director Independence" briefly discusses the Board of Director independence requirements of the NASDAQ Stock Market.  In addition to this discussion, please include a brief discussion of the Board of Director independence requirements of the Investment Company Act of 1940 (the "1940 Act").

Response: The requested changes have been made.  The revised disclosure reads as follows:

The 1940 Act and the NASDAQ rules require that the Company's Board of Directors consist of at least a majority of independent directors. Under the 1940 Act, in order for a director to be deemed independent, he or she, among other things, generally must not: own 5% or more of the voting securities or be an officer or employee of the Company or of an investment advisor or principal underwriter to the Company; control the Company or an investment advisor or principal underwriter to the Company; be an

Prospect Capital Corporation

September 10, 2010

Page 3

officer, director or employee of an investment advisor or principal underwriter to the Company; be a member of the immediate family of any of the foregoing persons; knowingly have a direct or indirect beneficial interest in, or be designated as an executor, guardian or trustee of an interest in, any security issued by an investment advisor or principal underwriter to the Company; be a partner or employee of any firm that has acted as legal counsel to Company or an investment advisor or principal underwriter to the Company during the last two years; or have certain relationships with a broker-dealer or other person that has engaged in agency transactions, principal transactions, lent money or other property to, or distributed shares on behalf of the Company.  Under NASDAQ rules, in order for a director to be deemed independent, our Board of Directors must determine that the individual does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities.  On an annual basis, each member of our Board of Directors is required to complete an independence questionnaire designed to provide information to assist the Board of Directors in determining whether the director is independent under the 1940 Act and the NASDAQ rules. Our Board of Directors has determined that each of our directors, other than Messrs. Barry and Eliasek, is independent under the 1940 Act and the applicable NASDAQ rules.

Comment 4:   Please revise the first sentence in the paragraph immediately above the recent share price table on page 20 of the proxy statement to make clear that the market price of the Company's shares may be less than NAV per share, regardless of the performance of the Company's underlying investments.

Response: We have revised the disclosure as requested.  The sentence now reads as follows:

Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares, regardless of the performance of the BDC's investments.

Comment 5:   Please include disclosure that describes the Board of Directors' views on how sales of common stock at prices below NAV per share may impact the market price of the Company's common stock.

Prospect Capital Corporation

September 10, 2010

Page 4

Response:  We note that the proxy statement contains the following disclosure under the subsection entitled "Reasons to Offer Common Stock Below NAV Per Share" on page 21 of the proxy statement:

[T]he Board believes that the Company’s sales of common stock at less than NAV per share during 2010 provided the Company with capital strength and flexibility and contributed to the strengthening of the Company’s stock price.

We have expanded upon this disclosure by adding the following sentence:

The Board believes that sales of common stock at less than NAV per share in the future could have either a positive or negative effect on the Company's stock price depending on a variety of factors, including the Company's use of the proceeds of such sales.

Comment 6:   We note that the Company's proxy statement allows for two methods of stockholder approval with respect to sales of common stock below NAV per share.  With respect to the second method of approval listed (i.e., approval under Section 23 of the 1940 Act), please discuss whether you believe it is good business practice for a business development company to issue shares below NAV under Section 23 instead of Section 63 (e.g., not requiring a majority of independent board members to approve the issuance).

Response:  The 1940 Act provides business development companies with two separate pathways for conducting sales of common stock below NAV per share.  One pathway is under Section 23 and the other is under Section 63.  The Company believes that providing the option to make use of either pathway, as allowed for by the 1940 Act, is good business practice.  In fact, the Company believes that having the flexibility to access the capital markets is essential to the Company's continued growth and its ability to increase its distribution rate.  Accordingly, the Company wants to ensure that is has continued access to the capital markets.  Providing stockholders with both options to approve Proposal III helps achieve this.  In addition, it should be noted that the Board of Directors of the Company, including a majority of the independent Directors, approved the proposal to offer shares of the Company's common stock at prices below NAV per share (whether under Section 23 or Section 63) as being in the best interests of the Company and its stockholders and recommended it to the stockholders for their approval.

Prospect Capital Corporation

September 10, 2010

Page 5

We note that if stockholders approve Proposal III in accordance with Section 63 the Company will not adjourn the meeting to also solicit votes under Section 23.  However, in the instance that stockholder approval is not obtained under Section 63, the Company will look at whether stockholder approval was obtained under Section 23.

Comment 7:   The proxy contains the following disclosure: "We believe that a rights offering might result in raising additional equity at a lower price per share than an offering done as a result of this proposal, because a rights offering requires a long registration process and marketing period which might result in greater share price erosion."  Please clarify whether this also means that a rights offering results in a greater discount to NAV per share than a common stock offering below NAV per share.

Response:  The requested changes have been made.  The disclosure has been revised to read as follows:

A rights offering may be at a greater discount to NAV per share than an offering of our common stock at a price below our NAV per share because, among other things, a rights offering requires a long registration process and marketing period which might result in greater share price erosion.  As such,we believe that having the ability to issue our common stock below NAV per share in

Prospect Capital Corporation

September 10, 2010

Page 6

accordance with the terms of this proposal would, in many instances, be preferable to such an issuance pursuant to a rights offering.

Comment 8:   Page 23 of the proxy statement, under the subsection entitled "Impact On Existing Stockholders Who Do Participate in the Offering," contains disclosure regarding the impact an offering below NAV may have on existing stockholders who participate in such an offering.  With respect to this disclosure, please make clear that existing stockholders who participate in an offering below NAV will experience dilution on their existing shares.  In particular, we recommend the following language [in bold and italics] to the following paragraph:

Existing stockholders who buy more than such percentage will experience NAV per share dilution on their existing shares but will, in contrast to existing stockholders who purchase less than their proportionate share of the offering, experience an increase (often called accretion) in average NAV per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering.

Response:  The requested changes have been made.

Comment 9:   Please delete the words "increases and" from the following sentence, which appears on page 23 of the proxy statement in the section discussing the impact an offering below NAV may have on existing stockholders who participate in such an offering:  "These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential increases and decreases in NAV per share."

Response:  The requested changes have been made.

Comment 10:  With respect to the dilution tables appearing on pages 23 and 24 of the proxy statement, please add disclosure that makes clear the tables reflect the effect that an offering below NAV may have on NAV but not the effect such an offering may have on market price.

Response:  The following disclosure has been added after the dilution tables:

The tables above provide hypothetical examples of the impact that an offering at a price less than NAV per share may have on the NAV per share of existing stockholders who do and do not participate in such

Prospect Capital Corporation

September 10, 2010

Page 7

an offering.  However, the tables above do not show and are not intended to show any potential change in market price that may occur from an offering at a price less than NAV per share and it is not possible to predict any potential market price change that may occur from such an offering.

*          *          *           *

Prospect Capital Corporation

September 10, 2010

Page 8

If you have any questions or comments or require any additional information in connection with the above, please telephone Richard Prins at (212) 735-2790 or Carmine Lekstutis at (212) 735-2132.

Sincerely,

Prospect Capital Corporation

/s/ Brian H. Oswald

Name: Brian H. Oswald

Title: Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary

CORRESP
1
filename1.htm

    corresp.htm

    Skadden,
Arps, Slate, Meagher & Flom llp

    FOUR
TIMES SQUARE

    NEW
YORK 10036-6522

    ________

    TEL:
(212) 735-3000

    FAX:
(212) 735-2000

    www.skadden.com

     DIRECT
DIAL

212-735-2790

     DIRECT
FAX

917-777-2790

    RPRINS@SKADDEN.COM

March 3, 2010

    VIA
EDGAR

    Mr.
Larry Greene

    Senior
Counsel

    United
States Securities and Exchange Commission

    100
F Street, N.E.

    Washington,
D.C.  20549

              RE:

              Registration
      Statement (File No. 333-164270) of Prospect Capital Corporation (the
      "Company")

    Dear
Mr. Greene:

    We
are in receipt of comments provided by you over the phone on March 2, 2010
regarding the prospectus included in Pre-Effective Amendment No. 1 to the
Company's Registration Statement on Form N-2 (the "Registration
Statement").

    The
Company has considered your comments and has authorized us to make on its behalf
the responses and changes to its prospectus discussed below.  The
Company's responses to the comments are set forth below.  For ease of
reference, a summary of each comment is set forth in italics and followed by the
corresponding response.

    The
Company previously requested on February 26, 2010 that Pre-Effective Amendment
No. 1 to its Registration Statement be declared effective as promptly as
practicable.  Given the minor nature of the changes discussed below,
the Company understands that the effectiveness of the Registration Statement
will be accelerated

            Mr.
Larry Greene

            March
3, 2010

            Page
2

    and
that the Company will make the changes discussed below to its prospectus in a
497 filing after the Registration Statement has been declared effective by the
staff.

    General

    1.  Our
initial comment letter asked for disclosure to be added to the Registration
Statement concerning the Company's offers to purchase Allied Capital Corporation
("Allied").  Please supplement the initial response by confirming that
the Company does not intend to over-bid for Allied.

    Supplementing
the Company's initial response of February 26, 2010, we confirm that the Company
does not intend to bid more for Allied than the Company concludes it is
worth.  To this end, the Company has conditioned each offer that it
has made on its ability to conduct due diligence to ensure, among other things,
that the Company believes it would not be paying more for Allied than Allied is
worth.

    2.  We
reiterate our comment to remove footnote 7 from the Fee Table or otherwise add
disclosure concerning the Company's intentions to repay its debt during the
current year.

    Footnote 7 will be removed from the fee
table.

    3.  Please
include the following sentence or similar disclosure in the Plan of Distribution
section: “Any of our common stock sold pursuant to a prospectus supplement will
be listed on The NASDAQ Global Select Market, or another exchange on which our
common stock is traded.”

    The requested change will be
made.

    *          *          *          *          *

            Mr.
Larry Greene

            March
3, 2010

            Page
3

    If
you have any questions or comments or require any additional information in
connection with the above, please telephone the undersigned at (212) 735-2790 or
Carmine Lekstutis at (212) 735-2132.

              Sincerely,

              /s/
      Richard T. Prins

              Richard
      T. Prins

1

February 25, 2010
 Carmine Lekstutis, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036-6522  Re: Prospect Capital Corporation (the “Fund”)
 Shelf Registration Statement on Form N-2
 File Numbers 814-00659; 333-164270
Dear Mr. Lekstutis,
 On January 8, 2010, the Fund filed a regist ration statement on Form N-2 under the
Securities Act of 1933 (“Securities Act”).  Your  cover letter to the filing requested that
the staff perform a limited review in accord ance with Securities Act Release No. 6510
(February 15, 1984). With certain exceptions, we  have limited our review of the filing.
The Fund is a business development compa ny ("BDC") regulated under the Investment
Company Act of 1940 (“1940 Act”).  The f iling was made to register an offering,
pursuant to Rule 415 under the Securities Ac t, of the Fund’s common and preferred
stocks, debt securities , and warrants.
 Our comments regarding the filing are set forth below.
General

1. Earlier this year, the Fund announced that it was seeking to ac quire Allied Capital
Corporation. Please include appropriate di sclosure in the prospectus about the
proposed transaction, including any material  risks, and the effect the merger
would have on the Fund.
 2.         We remind the Fund of its obligation to file electronic repo rts with respect to its
fidelity bond coverage under Rule 17g-1(g) under the 1940 Act.

3. Please advise the staff whether the Fina ncial Industry Regulatory Authority has
reviewed and passed upon the terms of the distribution arrangements, including
all the compensation payable to the distributors?

 2

Prospectus

 Outside Front Cover Page

3. The table on the facing page of the regist ration statement is in  a format different
from that required by Item 1(g) of Form  N-2. Confirm to the staff that any
prospectus supplement used to sell shares will have the pricing table required by
Item 1(g) of Form N-2.

Prospectus Summary
   T h e  O f f e r i n g   4.         The first paragraph states that the Fund will initially use the proceeds to pay down
debts.  Please disclose in the summar y the total dollar amount of debt to be
retired, and what percentage of the proceeds of the offering will be used in this manner.  Also clarify whether the sales below NAV as discussed in the prospectus
apply only to direct offerings of commo n stock by the Fund, or whether it also
applies to the other securities and tr ansactions covered by the registration
statement.
 5. In the last line of the third paragraph, pl ease update the date of the last reported
sales price.

  Fees and Expenses  6. The fee table line item for management f ee includes is inconsistent with Form N-
2.  Given the two fees, revise the fee tabl e to include two line items: one for the
asset based charge as expr essed in net assets, and a second line item for the
income and realized capital gain advisory f ees of twenty percent.  To help clarify
that those two fees are not asset-based, the twenty percent number may be indented and not aligned unde r the other figures expresse d as a percentage of net
assets.
 7. We suggest shortening the f ootnote 6 to the fee table to  include only the first and
last sentences of the footnot e. The additional disclosure should be relocated to a
more appropriate location in the prospect us. Also, please revise the last sentence
to reflect information for the three months ended December 31, 2009.
 8.         Delete footnote 7 to or explain its relevance to the staff in light of the Fund’s
outstanding borrowing and intent to issue additional debt securities.

 39. Revise footnote 8 to state that “other expenses” are based on estimated amounts
for current the fiscal year. See Inst ruction 6 to Item 3 of Form N-2.
 10. The financial statements later in the prospectus show a material investment by the
Fund in money market funds.  Please advise the staff why the fee table does not have the AFFE line item.  Please confirm th at, if the indirect costs are less than
one basis point, such indirect expenses  are nevertheless included in “other.”
   Example  10.  Please clarify the “stockholder costs” men tioned in the last sentence of the first
paragraph, including what entity pays these costs.   Are these shareholder
transaction expenses?
   Selected Condensed Fina ncial Data of Prospect

11. Please revise the disclosure to state that financial information presented in this
section for 2005 through 2009 has been audi ted. See Instruction 8 to Item 4 of
Form N-2.

Risk Factors

12. The prospectus discloses, in bold that  the most recent net asset value was
calculated on September 30, 2009, and when  calculated effective December 31,
2009 may be higher or lower.  Please update this information.

12.  Please update the effective date referenced in this subheading.

If we sell common stock at a discount to our net asset value per share, stockholders who do not pa rticipate in such sale will
experience immediate dilution in an  amount that may be material.
    The Energy Industry is Subject to Many Risks  16. If applicable, please revi se this section of the prospectus to address the
Commission’s recent release providing inte rpretive guidance on disclosure related
to business or legal developmen ts regarding climate change.
   Senior Securities  17.        The disclosure under this section states that information denoted with a “--“
reflects “information which the SEC expressl y does not require to be disclosed for
certain types of senior s ecurities.” Please inform the staff to what this is
referencing.  Please provide us with the omitted information.

 4
Price Range of  Common Stock
 14. Please update all dates in footnotes 3 and 4   Plan of Distribution  18.       The section discloses that th e Fund may engage in transferable and non-
transferable offerings, and appears to set forth contradictory statements in the first and fifth paragraphs regarding the issu ance of rights to subscribe to common
stock at and below net asset value.  Please reconcile this disclosure.

With respect to tran sferable rights offerings, such offerings should be consistent
with an understanding that they are to be  designed for exceptional and not routine
circumstances. In this connection, I nvestment Company Act Release No. 9932
(September 15, 1977) indicates that tran sferable rights offerings are truly
exceptional, that the exception permitting them is to be construed narrowly, and that directors must make a determination that there is a reas onable likelihood that
existing shareholders will exercise a very  substantial majority of the rights.
Explain to the staff the manner in which th e Fund’s offerings are to be structured
consistent with these required determinations.

Disclosure in the second paragraph stat es that, “[i]n addition, pursuant to the
terms of certain applicable registration ri ghts agreements entered into by us or that
we may enter into in the future, certain of our stockholders may resell shares of
our common stock under this prospectus  and as described in any related
prospectus supplement.” Briefly summar ize the type of information to be
disclosed regarding such sales as required by Regulation S-K, Item 507.

19.       The following paragraph was deleted from the current filing: “Any of our
common stock sold pursuant to a prospectus supplement will be listed on The NASDAQ Global Select Market, or anothe r exchange on which our common
stock is traded.” Indicate to the staff whether the deletion reflects a change in
actual policy.

Closing

 We note that portions of the filing ar e incomplete. We may have additional
comments on such portions when you complete them in a pre-effective amendment, on
disclosures made in response to this letter , on information suppl ied to the staff in
EDGAR correspondence, or on exhibits ad ded in any pre-effective amendment.

 Where a comment is made in one location, it is applicable to a ll similar disclosure
appearing elsewhere in the registration statement.

 5Response to this letter shoul d be in the form of a pr e-effective amendment filed
pursuant to Rule 472 under the Securities Act.  Where no change will be made in the
filing in response to  a comment, please indica te that fact in a s upplemental letter and
briefly state the basis for your opinion.
 Please advise us if you have submitted or  expect to submit a no-action letter in
connection with your registration statement.
 You should review and comply with all applicable requirements of the federal
securities laws in connection with the pr eparation and distribution of preliminary
prospectus.
 We urge all persons who are responsibl e for the accuracy and adequacy of the
disclosure in these filings reviewed by the sta ff to be certain that they have provided all
information investors require for an informed decision.
Since the Fund and its management are in  possession of all facts relating to the
Fund’s disclosure, they are responsible for th e accuracy and adequacy of the disclosures
they have made.
 Notwithstanding our comments, in the ev ent the Fund requests acceleration of the
effective date of the pending registration statem ent, it should furnish a letter, at the time
of such request, acknowledging that:
• The Fund is responsible for the adequacy and accuracy of the disclosure in the
filing;

• Should the Commission or the staff, ac ting pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from taking any
action with respect to the filing;

• The action of the Commission or the staff,  acting pursuant to de legated authority,
in declaring the filing effective, doe s not relieve the Fund from its full
responsibility for the adequacy  and accuracy of the disclosure in the filing; and

• The Fund may not assert the action as a de fense to any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.

In addition, please be advised that the Di vision of Enforcement has access to all
information you provide to the staff of th e Division of Investment Management in
connection with our review of your filing or  in response to our comments on your filing.

 6We will consider a written request for acceleration of the effective date of the
registration statement as a confirmation of th e fact that those reque sting acceleration are
aware of their respec tive responsibilities.

We will act on the request and, pursuant to  delegated authorit y, grant acceleration
of the effective date.

Should you have any questions regarding this  letter, please contact David Woliner
at 202-551-6861 or me at 202-551-6976.
       S i n c e r e l y ,

         L a r r y  G r e e n e          S e n i o r  A t t o r n e y

CORRESP
1
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    corresp.htm

    November
6, 2009

    VIA
EDGAR

    Larry
Greene, Esq.

    Securities
and Exchange Commission

    Division
of Investment Management

    100
F Street, N.E.

    Washington,
D.C. 20549

              Re:

              Registration
      Statement (File No. 333-143819) of Prospect Capital Corporation (the
      "Company")

    Dear
Mr. Greene:

    In
accordance with Rule 461 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the Company hereby requests acceleration of
Post-Effective Amendment No. 17 to the Registration Statement on Form N-2 filed
on November 6, 2009 so that it may become effective by 2:00 p.m. (Eastern
time) on November 9, 2009 or as soon as thereafter
practicable.

    The
Company hereby acknowledges that: (1) it is responsible for the adequacy and
accuracy of the disclosure in the filing; (2) staff comments or changes to
disclosure in response to staff comments do not foreclose the Securities and
Exchange Commission from taking any action with respect to the filing; and (3)
the Company may not assert staff comments as a defense in any proceeding
initiated by the Securities and Exchange Commission or any person under the
federal securities laws of the United States.

    The
Company hereby requests that you notify Richard Prins (212-735-2790) or Carmine
Lekstutis (212-735-2132) of Skadden, Arps, Slate, Meagher & Flom LLP by
telephone once the Registration Statement has been declared
effective.

    Very
truly yours,

    Prospect
Capital Corporation

                    /s/ Brian H.
      Oswald

    Name:
Brian H. Oswald

    Title:
Chief Financial Officer, Chief Compliance Officer,

              Treasurer
and Secretary

CORRESP
1
filename1.htm

    corresp.htm

    Skadden,
Arps, Slate, Meagher & Flom llp

    FOUR
TIMES SQUARE

    NEW
YORK 10036-6522

    TEL:
(212) 735-3000

    FAX:
(212) 735-2000

    www.skadden.com

    November
6, 2009

                VIA
      EDGAR

              Mr.
      Larry Greene

              Senior
      Counsel

              United
      States Securities and Exchange Commission

              100
      F Street, N.E.

              Washington,
      D.C.  20549

              RE:

              Registration
      Statement (File No. 333-143819) of Prospect Capital Corporation (the
      "Company")

    Dear
Mr. Greene:

    We
are in receipt of comments provided by you over the phone on November 5, 2009
regarding the Company's Registration Statement on Form N-2 (the "Registration
Statement").

    The
Company has considered your comments and has authorized us to make on its behalf
the responses and changes to the Company's Registration Statement discussed
below.  These changes will be reflected in Post-Effective Amendment
No. 17 to the Company's Registration Statement.

    The
Company's responses to the comments are set forth below.  For ease of
reference, a summary of each comment is set forth in italics and followed by the
corresponding response.

      In
addition, please note that the Company desires to be declared effective by
November 9, 2009.  As such, it is contemporaneously filing an
acceleration request letter along with this response and the filing of
Post-Effective Amendment No. 17 to the Company's Registration
Statement.

          Mr.
Larry Greene

          November
6, 2009

          Page
2

    1.   Please
disclose on the cover page of the prospectus supplement that the Company is
currently seeking shareholder approval to extend its authorization to issue
shares below net asset value.

    The
requested change has been made.

    2.   Please disclose on
the cover page of the prospectus supplement that sales made by selling
stockholders may have a negative effect on the share price of the Company's
stock.

    The requested change has been
made.

    3.   Please delete the
reference to "state securities commissions" in the bolded boiler plate language
on the cover page of the prospectus supplement.

    The requested change has been
made.

    4.   You currently
include disclosure in the "Selling Stockholder" section of the prospectus
supplement concerning two private stock offerings, including the number of
shares issued in each offering.  You also include disclosure in this
section discussing when selling stockholders can sell shares pursuant to Rule
144.  With respect to the number of shares issued, please include the
percentage of total shares outstanding that each private offering constituted
(based on the total number of shares outstanding after giving effect to both
private stock offerings).  With respect to the Rule 144 disclosure,
please
expand upon such disclosure so as to briefly explain the nature of the
rule.

    The requested changes have been
made.

    5.   Please revise the
first sentence of the third paragraph in the "Selling Stockholder" section of
the prospectus supplement so that it is clear to readers the information in the
table is referring to selling stockholders who purchased shares in the private
stock offerings.

    The requested change has been
made.

    6.   Please ensure that
the table in the "Selling Stockholder" section of the prospectus supplement
complies with Item 507 of Regulation S-K.

    Your comment is noted.  The
table will comply with Item 507 of Regulation S-K.

          Mr.
Larry Greene

          November
6, 2009

          Page
3

    7.   Please
supplementally advise us whether the authority to conduct the offerings below
net asset value listed in the "Recent Sales of Common Stock Below Net Asset
Value" section of the prospectus supplement was obtained pursuant to Section
23(b) or 63(2) of the Investment Company of 1940.

    The authority to conduct such offerings
was obtained pursuant to Section 63(2) of the Investment Company Act of
1940.

    8.   The prospectus
supplement, in discussing the procedures the Board follows when approving a
below net asset value issuance, states in the "Sales of Common Stock Below Net
Asset Value" section that "a majority of our directors who have no financial
interest in the sale and a majority of our independent directors must (a) find
that the sale is in our best interests and in the best interests of our
stockholders, and (b) in consultation with any underwriter or underwriters of
the offering, make a good faith determination as of a time either immediately
prior to the first solicitation by us or on our behalf of firm commitments to
purchase such shares, or immediately prior to the issuance of such shares, that
the price at which such shares are to be sold is not less than a price which
closely approximates the market value of such shares, less any distributing
commission or discount."  With respect to the price at which such
shares are sold, please supplementally confirm whether such price includes any
sales loads.

      We
hereby confirm that this price is after deducting any applicable sales
loads.

    9.   Please
supplementally advise us whether the first full risk factor on page 19 of the
prospectus concerning the Company's most recently calculated net asset value
will be updated to reflect the Company's September
30, 2009 net asset value per share when it is published.

    The prospectus supplement will be
updated with this information, including on the cover page.  However,
the risk factor in the base prospectus will not be updated.

    10.   Where applicable,
please include disclosure that describes the following throughout the prospectus
supplement and the prospectus: (1) the Company is currently seeking shareholder
approval to extend for
an additional year its authorization to issue shares below net asset
value; and (2) the Company may obtain approval to sell shares below net asset
value pursuant to either Section 23(b) or 63(2) of the Investment Company Act of
1940.

    The requested changes have been
made.

          Mr.
Larry Greene

          November
6, 2009

          Page
4

    11.   The last risk factor
on page 30 of the prospectus discusses the Maryland Control Share Acquisition
Act.  In particular, it contains disclosure that the Company's bylaws
contain a provision exempting the Company from the Maryland Control Share
Acquisition Act, but that the Company's Board of Directors can choose to amend
or eliminate this provision.  Please modify the last paragraph in this
risk factor to include a statement that prior to amending or eliminating this
provision the Company will notify the Division of Investment Management at the
SEC.

    The requested change has
been made.

      12.   Please revise the
"Use of Proceeds" section in the prospectus and prospectus supplement so that it
reads in a plain English style.

      The
requested change has been made.

        13.   Please include an
explanation in footnote 2 to the fee table in the prospectus supplement that the
offering expenses attributable to the registration of shares being sold by the
selling stockholders will or has been paid by the Company.

        The
requested change has been made.

    *           *           *           *           *

          Mr.
Larry Greene

          November
6, 2009

          Page
5

    If
you have any questions or comments or require any additional information in
connection with the above, please telephone the undersigned at (212) 735-2790
or Carmine Lekstutis at (212) 735-2132.

              Sincerely,

              /s/ Richard T. Prins

              Richard
      T. Prins

CORRESP
1
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corresp

    Skadden, Arps, Slate, Meagher & Flom llp

    FOUR TIMES SQUARE

    FIRM/AFFILIATE

    NEW YORK 10036-6522

    OFFICES

    TEL: (212) 735-3000

    BOSTON

    FAX: (212) 735-2000

    CHICAGO

    www.skadden.com

    HOUSTON

    LOS ANGELES

    PALO ALTO

    SAN FRANCISCO

    WASHINGTON, D.C.

    WILMINGTON

    BEIJING

    October 22, 2009

    BRUSSELS

    FRANKFURT

    HONG KONG

    LONDON

    MOSCOW

    MUNICH

    PARIS

    SÃO PAULO

    SHANGHAI

    SINGAPORE

    SYDNEY

VIA E-MAIL AND EDGAR

Mr. Larry Greene

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy Statement/Prospectus on Form N-14

(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

Dear Mr. Greene:

     We are submitting this letter to respond to comments orally issued by the staff of the
Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on October 21, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 and amended on October 20, 2009 in
connection with the proposed merger of Patriot with and into Prospect.

     Prospect and Patriot have considered your comments and have authorized us to make on their behalf
the responses and amendments to the Form N-14 discussed below. These changes have been reflected in
Pre-Effective Amendment No. 2 to the Form N-14. For ease of reference, the Staff’s comments are
set forth below in italics and are followed by the responses of Prospect and/or Patriot. The
captions and page numbers we use below generally correspond to those used in the Form N-14. Any
capitalized terms used but not defined in this letter have the meaning given to them in the Form
N-14.

Mr. Larry Greene

October 22, 2009

Page 2

General

Comment:

    1.

    Please confirm that the disclosure regarding FBR Capital Markets & Co. (“FBR”)
comports with the requirements of Item 509 of Regulation S-K.

    Response: We believe that the disclosure regarding FBR comports with the
requirements of Item 509 of Regulation S-K. In that regard, we note the disclosure regarding the
fees payable to FBR by Patriot on page 88 of the proxy/'prospectus, including the portion thereof
that is contingent upon the consummation of the merger, and supplementally inform the staff that
we have been advised by FBR that it does not have a substantial interest in Prospect or any of
its parents or subsidiaries and is not connected with any such entities in any of the manners set
forth in Item 509 of Regulation S-K.

Comment:

    2.

    We note that the legality opinion should be rendered in close time proximity to
the declaration of effectiveness of the N-14 and that if it is not done so we may
require the filing of an updated legality opinion.

    Response: Your comment is noted. However, we do not necessarily agree that
an updated legality opinion will be required in such a case. In the event the From
N-14 is not declared effective in the near future, we will discuss this matter with
you at such time.

Comment:

    3.

    Please clarify how proxies will treat abstentions and how broker-non votes will
be treated in the instance there is a vote to adjourn the meeting.

    Response: In accordance with the instructions on the proxy card, if a
shareholder instructs a proxy to abstain from voting on a proposal to adjourn the
meeting, then the proxy will abstain from voting on such a proposal. Since the
holders of shares representing a majority of the votes present in person or by proxy
at the special meeting are required to approve such a proposal, abstentions will be
treated for purposes of the adjournment vote as votes cast “against” the
adjournment. Disclosure to this effect is already included in the Form N-14 on page
53. In addition, Patriot has made revisions to the Form N-14 clarifying the effect of
abstentions on the adjournment proposal.

    Since the underlying matter that is being voted upon is not
considered ordinary, Patriot does not expect that there will be any broker non-votes on a vote to adjourn the
meeting.

Mr. Larry Greene

October 22, 2009

Page 3

Comment:

    4.

    Please add disclosure to the From N-14 regarding Prospect’s upcoming annual
meeting and that Prospect’s shareholders will be voting on a proposal to authorize the
issuances of shares below net asset value. In addition, please add the disclosure and
dilution charts regarding below net asset value issuances contained in Prospect’s most
recent definitive proxy statement to the Form N-14. Please be sure to include the
discussion contained in the proxy statement regarding the separate voting standards for
obtaining approval of below net asset value issuances (i.e., the Section 23(b) standard
and the Section 63(2) standard) and please also note that Section 23(b) does not impose
a one-year time limit or require that the board determine that the price at which the
securities are to be offered “closely approximates the market value of those
securities.”

    Response: The requested changes have been made.
Prospect had added a section entitled “Sales of Common Stock Below Net
Asset Value by Prospect” to the Form N-14.

*     *     *     *     *

     If you have any questions or comments or require any additional information in connection with
the above, please telephone the undersigned at (212) 735-2790, Harry S. Pangas of Sutherland Asbill
& Brennan LLP at (202) 383-0805 or Steven Boehm of Sutherland Asbill & Brennan LLP at (202)
383-0176.

    Sincerely,

    /s/ Richard T. Prins

    Richard T. Prins

CORRESP
1
filename1.htm

    pcc_corresp.htm

            October 22,
      2009

    VIA
EDGAR

    Larry
Greene, Esq.

    Securities
and Exchange Commission

    Division
of Investment Management

    100
F Street, N.E.

    Washington,
D.C. 20549

              Re:

              Merger
      Proxy Statement/Prospectus on Form N-14 (File No.
    333-161764)

              of
      Prospect Capital Corporation and Patriot Capital Funding,
    Inc.

    Dear
Mr. Greene:

    In
accordance with Rule 461 of the General Rules and Regulations under the
Securities Act of 1933, as amended, Prospect
Capital Corporation hereby requests acceleration of the Proxy
Statement/Prospectus on Form N-14 filed on September 4, 2009 and amended on
October 20, 2009 and October 22, 2009 so that it may become effective by 5:00
p.m. on October 22, 2009 or as soon as thereafter practicable.

    Prospect
Capital Corporation and Patriot Capital Funding, Inc. hereby acknowledge that:
(1) each is responsible for the adequacy and accuracy of the disclosure in the
filing; (2) staff comments or changes to disclosure in response to staff
comments do not foreclose the Securities and Exchange Commission from taking any
action with respect to the filing; and (3) neither company may assert staff
comments as a defense in any proceeding initiated by the Securities and Exchange
Commission or any person under the federal securities laws of the United
States.

    Very
truly yours,

              Prospect
      Capital Corporation

              Patriot
      Capital Funding, Inc.

              /s/
      Brian H. Oswald

              /s/
      Richard P. Buckanavage

              Name:
      Brian H. Oswald

              Name:
      Richard P. Buckanavage

              Title:
      Chief Financial Officer, Chief Compliance Officer, Treasurer and
      Secretary

              Title:
      President and Chief Executive Officer

CORRESP
1
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    corresp.htm

      October
21, 2009

      VIA
EDGAR

      Larry
Greene, Esq.

      Securities
and Exchange Commission

      Division
of Investment Management

      100
F Street, N.E.

      Washington,
D.C. 20549

                Re:

                Merger
      Proxy Statement/Prospectus on Form N-14 (File No.
    333-161764)

                of
      Prospect Capital Corporation and Patriot Capital Funding,
    Inc.

      Dear
Mr. Greene:

      In
accordance with Rule 461 of the General Rules and Regulations under the
Securities Act of 1933, as amended, Prospect
Capital Corporation hereby requests acceleration of the Proxy
Statement/Prospectus on Form N-14 filed on September 4, 2009 and amended on
October 20, 2009 so that it may become effective by 5:00 p.m. on
October 22, 2009 or as soon as thereafter practicable.

      Prospect
Capital Corporation and Patriot Capital Funding, Inc. hereby acknowledge that:
(1) each is responsible for the adequacy and accuracy of the disclosure in the
filing; (2) staff comments or changes to disclosure in response to staff
comments do not foreclose the Securities and Exchange Commission from taking any
action with respect to the filing; and (3) neither company may assert staff
comments as a defense in any proceeding initiated by the Securities and Exchange
Commission or any person under the federal securities laws of the United
States.

      Very
truly yours,

                Prospect
      Capital Corporation

                Patriot
      Capital Funding, Inc.

                /s/
      Brian H. Oswald

                /s/
      Richard P. Buckanavage

                Name:

                Brian
      H. Oswald

                Name:

                Richard
      P. Buckanavage

                Title:

                Chief
      Financial Officer, Chief Compliance Officer, Treasurer and
      Secretary

                Title:

                President
      and Chief Executive Officer

CORRESP
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[Letterhead of Sutherland Asbill & Brennan LLP]

October 12, 2009

VIA E-MAIL AND EDGAR

Mr. Kevin Rupert

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy Statement/Prospectus on Form N-14
(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

Dear Mr. Rupert

     We are submitting this letter to respond to accounting comments orally issued by the staff of
the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on October 8, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 in connection with the proposed merger
of Patriot with and into Prospect. The Staff’s comments are set forth below in italics and are
followed by the responses of Prospect and/or Patriot. References to the Form N-14 contained herein
are to the pre-effective amendment no. 1 thereto that has been filed with the SEC on the date
hereof.

Comment:

    1.

    Please include a pro forma condensed consolidated schedule of investments in
the Form N-14.

Response: We have included a Pro Forma condensed consolidated schedule of
investments in Amendment No. 1 to the registration statement on Form N-14, as requested.

Comment:

    2.

    We refer to the second oral comment that we issued to you on September 25, 2009
and note your response thereto. Please clarify whether the annualized fee is greater
than the actual income investment fee paid by Prospect during the fiscal year ended
June 30, 2008 in both absolute and percentage terms.

Mr. Kevin Rupert

October 12, 2009

Page 2

Response: We confirm that the annualized fee paid by Prospect during the fiscal
year ended June 30, 2008 was greater, in both absolute and percentage terms, than the actual
income investment fee.

Comment:

    3.

    We refer to the third oral comment that we issued to you on September 25, 2009.
We note that your response to the comment assumes that the entire amount of the 5%
annual return would constitute ordinary income. As a result, because the assumed 5%
annual return is significantly below the hurdle rate of 7% (annualized) that must be
achieved under the investment advisory agreement with Prospect’s investment adviser,
you have further assumed that no income-based incentive fee would be payable if
Prospect realized a 5% annual return on its investments. We do not believe that this
assumption is appropriate. Please revise the “Example” table assuming that some
portion of the 5% annual return would constitute realized capital gains.

Response: We have revised the disclosure accompanying the “Example” table in the
“Comparative Fees and Expense Ratios” section of Amendment No. 1 to the registration
statement on Form N-14, as requested.

Comment:

    4.

    We refer to the fifth oral comment that we issued to you on September 25, 2009.
In connection therewith, please also indicate where the combined assets of Patriot and
Prospect fall within the fair value hierarchy set forth in Statement of Financial
Accounting Standards, No. 157, Fair Value Measurements. In addition, please add
disclosure to the accompanying explanatory notes to the pro forma condensed
consolidated financial statements identifying Prospect’s consolidated subsidiaries.

Response: We have added disclosure under Note 1 to the Pro Forma Condensed
Consolidated Financial Statements to indicate that substantially all of the investments held
by Prospect and Patriot are Level 3 assets under the fair value heirarchy set forth in SFAS
No. 157. In addition, we have added disclosure under “Note 1. Organization” to the
Consolidated Financial Statements to identify Prospect Capital Funding, LLC, as a
wholly-owned subsidiary of Prospect.

Comment:

    5.

    We refer to the eighth oral comment that we issued to you on September 25, 2009
and your response thereto. Please include the substance of your response thereto in an
appropriate location in the Form N-14.

Response: We have included
disclosure under Note 1 to
the Pro Forma Condensed
Consolidated Financial
Statements to indicate that,
following the merger,
Prospect does

Mr. Kevin Rupert

October 12, 2009

Page 3

not anticipate any realignment of the
portfolio other than in
connection with repayments
by borrowers.

*     *     *

     If you have any questions or additional comments concerning the foregoing, please contact the
undersigned at (202) 383-0176, Rick Prins of Skadden Arps Slate Meagher Flom LLP at (212) 735-2790
or Harry S. Pangas of Sutherland Asbill & Brennan LLP at (202) 383-0805.

    Sincerely,

                                                         /s/ Steven B. Boehm

    Steven B. Boehm

CORRESP
1
filename1.htm

corresp

    Skadden, Arps, Slate, Meagher & Flom llp

    FOUR TIMES SQUARE

    FIRM/AFFILIATE

    NEW YORK 10036-6522

    OFFICES

    TEL: (212) 735-3000

    BOSTON

    FAX: (212) 735-2000

    CHICAGO

    www.skadden.com

    HOUSTON

    LOS ANGELES

    PALO ALTO

    SAN FRANCISCO

    WASHINGTON,
D.C.

    WILMINGTON

    BEIJING

    October 12, 2009

    BRUSSELS

    FRANKFURT

    HONG KONG

    LONDON

    MOSCOW

    MUNICH

    PARIS

    SÃO PAULO

    SHANGHAI

    SINGAPORE

    SYDNEY

    TOKYO

    TORONTO

    VIENNA

VIA E-MAIL AND EDGAR

Mr. Larry Greene

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy Statement/Prospectus on Form N-14

(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

     Dear Mr. Greene:

     We are submitting this letter to respond to comments orally issued by the staff of the
Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on October 7, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 in connection with the proposed merger
of Patriot with and into Prospect.

     Prospect and Patriot have considered your comments and have authorized us to make on their
behalf the responses and amendments to the Form N-14 discussed below. These changes have been
reflected in Pre-Effective Amendment No. 1 to the Form N-14. For ease of reference, the Staff’s
comments are set forth below in italics and are followed by the responses of Prospect and/or
Patriot. The captions and page numbers we use below generally correspond to those used in the Form
N-14. Any capitalized terms used but not defined in this letter have the meaning given to them in
the Form N-14.

Mr. Larry Greene

October 12, 2009

Page 2

General

Comment:

    1.

    In the event that Prospect requests acceleration of the effective date of the
Form N-14 and/or Patriot requests clearance to mail the merger proxy statement
contained therein to its stockholders, each of Prospect and Patriot should provide the
standard representation to the Staff that they will not use the SEC’s comment process
as a defense in any securities related litigation against them.

    Response: Your comment is noted. Upon Prospect requesting acceleration of
the effective date of the Form N-14 and/or Patriot requesting clearance to mail the
merger proxy statement to its shareholders, each company will
acknowledge that: (1)
each is responsible for the adequacy and accuracy of the disclosure in the filing;
(2) Staff comments or changes to disclosure in response to Staff comments do not
foreclose the SEC from taking any action with respect to the filing; and (3) neither
company may assert Staff comments as a defense in any proceeding initiated by the
SEC or any person under the federal securities laws of the United
States.

Comment:

    2.

    Please accompany any future amendments to the Form N-14 with a cover letter or
other letter identifying the individual(s) to whom the SEC Staff may contact regarding
questions pertaining to the Form N-14.

    Response: Your comment is noted.

Comment:

    3.

    Please include the table required by Item 4(b) of Form N-14.

    Response: In response to your comment, we have included a Pro Forma
Capitalization Table on page 68 of Amendment No. 1 to the Registration Statement
on Form N-14.

Comment:

    4.

    Please add disclosure in the Form N-14 clarifying the fact that Patriot’s
separate existence will cease upon completion of the merger and that, in conjunction
therewith, it will have to take certain steps to deregister under the Securities
Exchange Act of 1934 and withdraw its election to be regulated as a business
development company under the Investment Company Act of 1940.

    Response: We have revised the section entitled “The Merger Proposal” to
include a new paragraph that discusses the fact that, following the merger, Patriot
will cease to exist as a separate entity and will delist its securities, deregister
unsold

Mr. Larry Greene

October 12, 2009

Page 3

    securities and withdraw its election to be treated as a business development
company.

Comment:

    5.

    Please ensure that the Form N-14 contains appropriate disclosure relating to
the services provided by Patriot to its shareholders (e.g., the availability of a
dividend reinvestment plan) and the services provided by Prospect to its shareholders
and highlight any services that will be lost.

    Response: We have reviewed the Form N-14 and believe that the services
provided by Patriot to its shareholders are comparable to the services provided by
Prospect to its shareholders and that the disclosure is adequate on this point. In
this vein we note that both Patriot and Prospect offer investors a dividend
reinvestment plan.

Comment:

    6.

    Please file the consent of FBR Capital Markets & Co. as an exhibit to the Form
N-14. Alternatively, please delete all references to FBR Capital Markets & Co. in the
Form N-14. If you elect to file the consent of FBR Capital Markets & Co. as an exhibit
to the Form N-14, please ensure that the disclosure required by Regulation S-X
accompanies the discussion of FBR Capital Markets & Co. in the Form N-14.

    Response: We respectfully note that FBR Capital
Markets & Co. (“FBR”) is Patriot's
financial advisor and is not an accounting or law firm whose consent is required to be filed as an
exhibit to the Form N-14 pursuant to Item 16(11) or Item 16(12).  The fairness opinion of FBR is
being included as Annex B to Patriot's proxy statement to assist Patriot in satisfying its
disclosure obligations under Delaware law and not because it is required pursuant to Section 7 of
the Securities Act of 1933 and consequently, we do not believe that the consent of FBR is required
to be filed as an exhibit to the Form N-14 pursuant to  Item 16(14). Based on the foregoing, we do not
believe that any additional disclosure regarding FBR is required
pursuant to Regulation S-X.

Comment:

    7.

    Please include a copy of the legality opinion and tax opinion in a subsequent
filing. We will review these opinions when they are filed and may have comments.

    Response: Your comment is noted. The legality opinion
and the tax opinion will be filed by amendment prior to seeking effectiveness of the registration
statement on Form N-14.

Comment:.

    8.

    Please ensure that there is disclosure in the Form N-14 concerning the
financial interests of Patriot’s executive officers and board of directors with respect
to the merger.

Mr. Larry Greene

October 12, 2009

Page 4

    Response: We respectfully note that disclosure relating to the interests of
officers and directors of Patriot with respect to the merger is included in the
Summary Section on page 9 under the sub-heading, “Interests of Patriot’s Executive
officers and Directors in the Proposed Merger” and under the same sub-heading on
page 89 and in the risk factors under the heading “Certain executive officers and
directors of Patriot have interests in the completion of the proposed merger that
may differ from or conflict with the interests of Patriot
shareholders” on page 22.

Comment:

    9.

    Please supplementally address whether the $3.2 million termination fee Patriot
must pay to Prospect in certain circumstances is enforceable and whether such
termination fee raises any issues under Section 36 of the Investment Company Act of
1940.

    Response: We supplementally advise the Staff that termination fees of the
type included in the Merger Agreement have regularly been upheld by Delaware courts
and that the requirement that Patriot pay a termination fee in certain circumstances
is but one of several provisions designed to ensure that the Patriot Board of
Directors (the “Board”) will be deemed to have satisfied its fiduciary duties to
Patriot’s shareholders in connection with the merger.

    In short, the termination fee and so-called “fiduciary out” provisions of the Merger
Agreement provide the Board with the flexibility to accept a “superior proposal”
from a third party in certain circumstances in order to obtain for the Patriot
shareholders the best value reasonably available to them. For these purposes, a
“superior proposal” is generally defined as a legally binding, fully financed offer
with minimal contingencies that is both reasonably certain of being completed and
more favorable, from a financial perspective, to the Patriot shareholders than the
Prospect proposal.

    So long as certain substantive and procedural criteria are satisfied, the Board may
elect to cause Patriot to pay a $3.2 million termination fee to Prospect, terminate
the Merger Agreement, and enter into a definitive agreement with a third party who
makes a superior proposal. The termination fee payable to Prospect is designed to
compensate Prospect for its time and effort, legal and other fees and expenses, and
lost opportunity to complete the transaction. However, notwithstanding that the
termination fee would — mechanically — be paid by Patriot, the Merger Agreement
requires that the third party bidder provide Patriot with a deposit in an amount
equal to the termination fee. Thus, for all practical purposes the termination fee
would be paid by the third party, not by Patriot, and payment of the termination fee
would not impact the amount of consideration received by the Patriot shareholders.

Mr. Larry Greene

October 12, 2009

Page 5

    Termination fee provisions are common in merger agreements involving Delaware target
companies, and the level of the termination fee ultimately agreed to by the parties
(which represents approximately 3.7% of the equity value of the transaction as of
the date of signing), is consistent with the level of termination fees that have
withstood judicial scrutiny by the Delaware courts. For example, in analyzing the
fiduciary duties of directors of Delaware corporations as it relates to termination
fees, in recent years Delaware courts have upheld the following termination fees:
4.3% of the purchase price in In re The Topps Co. S’holders Litig. (Del. Ch. June
14, 2007); 3.75% of the purchase price in In re Toys “R” us, Inc. S’holder Litig.
(Del. Ch. June 24, 2005); and 3.5% of the equity value of the target company in In
re Lear Corp. S’holder Litig. (Del. Ch. June 15, 2007).

    In the present case, the level of the termination fee, as well as the related
“fiduciary out” provisions, were the subject of extensive negotiation between
Patriot and Prospect. Had the Board not agreed to the termination fee required by
Prospect, the Board would have been precluded under the Merger Agreement from
accepting a third party offer that was superior to the Prospect proposal. The Board
did not believe that such a complete “lock-up” was in the best interests of the
Patriot shareholders. In addition, in approving the Merger Agreement (including the
termination fee and the related “fiduciary out” provisions), the Board considered a
number of other factors, including the following:

    •

    Patriot’s dire financial condition and the possibility that Patriot would
run out of cash in the relatively near future unless a strategic partner was
found;

    •

    the fact Patriot had publicly announced that it was evaluating strategic
alternatives;

    •

    the extensive evaluation process undertaken by the Board in seeking those
strategic alternatives;

    •

    the financial terms of the Prospect proposal;

    •

    the likelihood that the Prospect transaction would be consummated in a
timely manner;

    •

    the opinion of Patriot’s financial advisor as to the fairness of the merger
consideration; and

    •

    the terms of the other proposals submitted, particularly as to the
consideration offered and the timing and certainty of closing.

    In view of the foregoing, the termination fee agreed to by the Board is consistent
with recent Delaware case law regarding the fiduciary duties of directors of
Delaware corporations and, the Board believes, in light of all the facts and
circumstances, is fair to, and in the best interests of, the shareholders of
Patriot. As a result, the Company believes that the termination fee is enforceable
and consistent with the fiduciary duties of the Board under Delaware law and Section
36 of the Investment Company Act of 1940.

Mr. Larry Greene

October 12, 2009

Page 6

Comment:

    10.

    Please include a glossary to the Form N-14 setting forth the names of the
entities that are mentioned throughout the Form N-14.

    Response: We respectfully disagree that the abbreviations used in the proxy
statement/prospectus are confusing to investors and require a Glossary. We believe
that the inclusion of a Glossary would be counter to the Plain English rules
promulgated by the Commission. In fact, Rule 421(b)(3) of Regulation C under the
Securities Act of 1933 specifically directs registrants to:

    avoid frequent reliance on glossaries or defined terms as the
primary means of explaining information in the prospectus.
Define terms in a glossary or other section of the document
only if the meaning is unclear from the context. Use a
glossary only if it facilitates understanding of the
disclosure.

    We believe that the defined terms used in the N-14 that relate to the various
parties are all clear from their context since they include a part of their name or
a variant relating to their name (i.e., Patriot, Prospect, FBR, Sutherland, BMO and
Young Conaway). None of the parties are referred to by a generic description, such
as Company or Acquiror. Other defined terms in the proxy statement/prospectus, such
as RIC and BDC, are commonly understood terms that
are not confusing to investors. The Plain English Handbook, on page 31,
specifically states that widely understood industry terms (i.e., REIT) can safely be
used without creating confusion to investors. We further note that the Staff has
particularly found glossaries to be helpful in debt registration statements where a
significant amount of disclosure revolves around numerous defined terms that come
straight from an Indenture or some other document that defines the characteristics
of the security being offered. Since Prospect is offering common stock to Patriot
shareholders, we do not believe that the proxy statement/prospectus presents the
same issues.

Comment:

    11.

    Please explain to us whether going concern disclosure or undertaking by
Prospect is required. Also, please make sure that going concern issues regarding
Patriot are adequately disclosed.

    Response: We respectfully submit that the merger will not have any going
concern effect on Prospect and therefore including such disclosure or undertaking is
unnecessary. In this regard, it should be noted that Prospect’s current revolving
credit facility does not mature until June 25, 2011 and that, after giving effect to
the merger, Prospect’s debt to equity ratio will remain at less than 20%.

Mr. Larry Greene

October 12, 2009

Page 7

    Patriot believes that the Form N-14 currently contains adequate disclosure regarding
Patriot’s going concern issues, including under “Risk Factors—Risks Related to
Patriot—There is substantial doubt about Patriot’s ability to continue as a going
concern,” “The Merger Proposal—Background of the Merger” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of
Patriot.”

Shareholder Letter

Comment:

    12.

    Please delete the reference to “state securities commissions” in the bolded
boiler plate language in the last paragraph of the shareholder letter.

    Response: The requested amendment has been made.

Questions and Answers Ab

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    Skadden, Arps, Slate, Meagher & Flom llp

    FIRM/AFFILIATE OFFICES

    FOUR TIMES SQUARE

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TEL: (212) 735-3000

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www.skadden.com

October 20, 2009

    BOSTON

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VIA E-MAIL AND EDGAR

Mr. Larry Greene

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy
Statement/Prospectus on Form N-14

(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

Dear Mr. Greene:

     We are submitting this letter to respond to comments orally issued by the staff of the
Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on October 15, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 in connection with the proposed merger
of Patriot with and into Prospect.

     Prospect and Patriot have considered your comments and have authorized us to make on their
behalf the responses and amendments to the Form N-14 discussed below. These changes have been
reflected in Pre-Effective Amendment No. 1 to the Form N-14. For ease of reference, the Staff’s
comments are set forth below in italics and are followed by the responses of Prospect and/or
Patriot. The captions and page numbers we use below generally correspond to those used in the Form
N-14. Any capitalized terms used but not defined in this letter have the meaning given to them in
the Form N-14.

Mr. Larry Greene

October 20, 2009

Page 2

General

Comment:

    1.

    We reiterate our previous comment regarding filing the consent of FBR Capital
Markets & Co. Please file the consent of FBR Capital Markets & Co. as an exhibit to
the Form N-14.

Response: We have included a consent from FBR Capital Markets & Co. as an
exhibit to Amendment No. 1 to the Registration Statement on Form N-14 related to the
opinion it provided to Patriot.

Comment:

    2.

    We reiterate our previous comment to include a copy of the legality opinion and
tax opinion in a subsequent filing. We will review these opinions when they are filed
and may have comments.

Response: Your comment is noted. We have included the legality and tax
opinion as exhibits to Amendment No. 1 to the Registration Statement on Form N-14.

Comment:

    3.

    With respect to the termination fee, please confirm that either Prospect’s or
Patriot’s legal counsel believes the termination fee is enforceable and consistent with
the fiduciary duties of the Board under Section 36 of the Investment Company Act of
1940.

Response: We hereby confirm, as legal counsel to Prospect, that we are of
the belief that the termination fee is enforceable and consistent with the fiduciary
duties of the Board under Section 36 of the Investment Company Act of 1940.

Comment:

    4.

    We reiterate our comment to use only one line item for the management fee and
the incentive fee.

Response: The requested change has been made.

Comment:

    5.

    With regard to adjournments, please clarify in what manner proxies will
exercise their discretion if a vote to adjourn the meeting is presented. In addition,
in Proposal 2 on page 243 of the Form N-14 please: (1) do not put any of the text in
all caps; and (2) be sure to file any additional soliciting materials that may be
used in the event the meeting is adjourned. In addition, please add language that

Mr. Larry Greene

October 20, 2009

Page 3

Patriot’s Board and its management will take into account the best interests of shareholders
in determining whether to adjourn the meeting. Specifically, please ensure that Patriot’s
Board and its management comply with Investment Company Release 7659 (1973), which provides
that management and the Board should take into account the shareholders’ best interests in
determining whether to adjourn a meeting and that they should not do so if it would clearly
be against shareholders’ wishes.

Response:

We have revised the disclosure in this section in response to your comment.

*     *     *     *     *

     If you have any questions or comments or require any additional information in connection with
the above, please telephone the undersigned at (212) 735-2790, Harry S. Pangas of Sutherland Asbill
& Brennan LLP at (202) 383-0805 or Steven Boehm of Sutherland Asbill & Brennan LLP at (202)
383-0176.

    Sincerely,

    /s/ Richard T. Prins

    Richard T. Prins

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[Letterhead of Sutherland Asbill & Brennan LLP]

October 5, 2009

VIA E-MAIL AND EDGAR

Mr. Kevin Rupert

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy Statement/Prospectus on Form N-14

(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

Dear Mr. Rupert

     We are submitting this letter to respond to accounting comments orally issued by the staff of
the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on September 25, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 in connection with the proposed merger
of Patriot with and into Prospect. The Staff’s comments are set forth below in italics and are
followed by the responses of Prospect and/or Patriot. References to the Form N-14 contained herein
are to the pre-effective amendment no. 1 thereto that has been filed with the SEC on the date
hereof.

Preliminary Merger Proxy Statement/Prospectus

Comparative Fees and Expense Ratios

Comment:

    1.

    We refer to the line items entitled “Management fee,” Incentive fee” and
“Interest expense on borrowed funds” in the “Patriot and Prospect’s Expenses” table on
page 13 of the preliminary merger proxy statement/prospectus. Please supplementally
explain to the Staff why the pro forma combined expense percentages for each of these
line items decreases.

Mr. Kevin Rupert

October 5, 2009

Page 2

Response: Please be advised that we have revised the pro forma combined percentages for
each of the above-referenced line items in the Form N-14. As a result, the pro forma combined
expense percentages for each of these line items now increases from the related actual expense
percentages, other than the line item entitled “Interest expense on borrowed funds.” The line item
entitled “Interest expense on borrowed funds” decreases as compared to the related actual expense
percentages as a result of the requirement under the terms of the merger agreement between Prospect
and Patriot that Prospect repay all amounts outstanding under Patriot’s second amended and restated
securitization revolving credit facility (the “Securitization Facility”) immediately prior to the
consummation of the merger of Patriot with and into Prospect. As of September 30, 2009, there was
approximately $112.7 million outstanding under the Securitization Facility and the interest rate
payable on amounts outstanding under the Securitization Facility was 7.0%. Thus, the elimination
of the indebtedness outstanding under the Securitization Facility immediately prior to the
consummation of the proposed merger transaction, coupled with the fact that the funds used to
eliminate this indebtedness were raised by Prospect through the sale of common stock, accounts for
the significant decrease in the pro forma combined expense percentage entitled “Interest expense on
borrowed funds” as compared to the related actual expense percentages.

Comment:

    2.

    We refer to footnote no. 4 to the “Patriot and Prospect’s Expenses” table on
page 13 of the preliminary merger proxy statement/prospectus. Please supplementally
disclose to the Staff whether the annualized level of incentive fee paid by Prospect
during the nine months ended March 31, 2009 is higher or lower than the actual
incentive fee paid by Prospect during the year ended June 30, 2008. We may have
further comment if the annualized level of incentive fee is lower than the actual
incentive fee paid by Prospect during the year ended June 30, 2008.

Response: The income investment fee paid by Prospect for the nine-month period ended March
31, 2009 was $11,795,000, yielding an annualized income incentive fee of $15,726,670 (the
“Annualized Fee”), or 3.54% of net assets attributable to Prospect’s common stock, as indicated in
the table on page 13 of the Form N-14. The Annualized Fee is greater than the actual income
investment fee paid by Prospect during the fiscal year ended June 30, 2008, which was $11,278,000,
as indicated in Prospect’s Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year
ended June 30, 2008, filed with the SEC on March 19, 2009, and on page 56 of the Form N-14.

In addition, please be advised that the “Patriot’s and Prospect’s Expenses” table has been updated
in light of the inclusion of financial statements for the year ended June 30, 2009 of Prospect in
the Form N-14 as well as for other updating or calculation changes.

Comment:

    3.

    We refer to the table included under the section entitled “Example” on page 14
of the preliminary merger proxy statement/prospectus. The dollar amounts reflected in
such table appear to be too low given the financial information included

Mr. Kevin Rupert

October 5, 2009

Page 3

    elsewhere in the preliminary merger proxy statement/prospectus. As a result, please
re-compute and revise the dollar amounts included in such table accordingly. Alternatively,
please supplementally explain to the Staff the reason for the apparent discrepancy between
the dollar amounts included in such table and the related-financial information included
elsewhere in the preliminary merger proxy statement/prospectus.

Response: Please be advised the expense amounts included in the “Example” table on page 14
of the Form N-14 are less than what would be expected in light of the other financial information
included elsewhere in the Form N-14 due to the fact we are required to assume a 5% annual return in
each of the denoted periods for purposes of completing the table. Thus, the incentive fee payable
to Prospect’s investment adviser would not likely be earned or payable in such circumstances and,
as a result, is not included in the “Example” table.

We have added disclosure to the Form N-14 to clarify this point. See page 14 of the Form
N-14.

Unaudited Pro Forma Per Share Data

Comment:

    4.

    We refer to the table included under the section entitled “Unaudited Pro Forma
Per Share Data” on page 19 of the preliminary merger proxy statement/prospectus.
Please include a footnote to the “Net asset value per share” columns included therein
with the substance of the disclosure included in footnote (A) to the table contained in
Note 4 to the pro forma condensed consolidated financial statements set forth on page
59 of the preliminary merger proxy statement/prospectus.

Response: We have revised the disclosure accordingly. See page 19 of the Form
N-14.

Unaudited Pro Forma Condensed Consolidated Financial Statements

Comment:

    5.

    We refer to the accompanying explanatory notes to the pro forma condensed
consolidated financial statements. Such accompanying explanatory notes do not
adequately address the matters typically discussed in accompanying explanatory notes to
pro forma financial statements. In this regard, such notes should, among other things,
address the basis for the presentation of the pro forma financial information and
discuss Statement of Financial Accounting Standards, No. 157, Fair Value Measurements.
We suggest that you review the accompanying explanatory notes to pro forma financial
statements for other public company merger transactions in connection with revising
the accompanying explanatory
notes to the pro forma condensed consolidated financial statements included in the
preliminary merger proxy statement/prospectus.

Mr. Kevin Rupert

October 5, 2009

Page 4

Response: We have revised the accompanying explanatory notes to the pro forma condensed
consolidated financial statements accordingly. See pages 63 through 67 of the Form N-14.

Comment:

    6.

    We refer to line item entitled “Cost in Excess of assets acquired” in the table
on page 59 of the preliminary merger proxy statement/prospectus. Please revise the
title of the line item to more appropriately reflect the nature of the line item.

Response: We have removed the line item entitled “Cost in Excess of assets acquired” in
the above-referenced table given that the information previously set forth in the line item is
contained in the column entitled “Adjustments” to the table and is further discussed in the notes
thereto. See page 57 of the Form N-2.

Index to Financial Statements

Comment:

    7.

    Please include the financial statements for the year ended June 30, 2009 of
Prospect in the preliminary merger proxy statement/prospectus. In addition, please
update disclosure elsewhere in the preliminary merger proxy statement/prospectus
accordingly.

Response: We have included the financial statements for the year ended June 30, 2009 of
Prospect in the Form N-14. See pages F-2 through F-34 of the Form N-14. In addition, we
have updated disclosure elsewhere in the Form N-14 accordingly. See pages 13, 17 through 19, 55
through 69, and 184 through 206 of the Form N-14.

Miscellaneous

Comment:

    8.

    Please supplementally advise the Staff as to whether Prospect anticipates that
there will be significant realignment of its or Patriot’s investment portfolio in
connection with the proposed merger transaction (e.g., to diversify Prospect’s
investment portfolio subsequent to the merger). If so, please disclose such fact as
well as the tax consequences thereof in the preliminary merger proxy
statement/prospectus.

Response: We have been advised by Prospect that it does not anticipate any significant
realignment of its or Patriot’s investment portfolio subsequent to the consummation of the proposed
merger transaction.

Mr. Kevin Rupert

October 5, 2009

Page 5

Comment:

    9.

    Please supplementally confirm to the Staff that Prospect has the authority
under Section 63 of the Investment Company Act of 1940 to issue shares of its common
stock below net asset value in connection with the proposed merger transaction.

Response: Please be advised that Prospect has the authority under Section 63 of the
Investment Company Act of 1940 to issue shares of its common stock below their net asset value per
share in connection with the proposed merger transaction. In this regard, please note that
Prospect’s shareholders approved Prospect’s policy and practice of making sales of shares of its
common stock below their then current net asset value per share at an annual meeting of
stockholders held on February 12, 2009. Such approval was not limited as to the number of shares
or the relationship of the price in any such sale to net asset value.

Comment:

    10.

    In the event that Prospect requests acceleration of the effective date of the
Form N-14 and/or Patriot requests clearance to mail the merger proxy statement
contained therein to its stockholders, each of Prospect and Patriot should provide the
standard representation to the Staff that they will not use the SEC’s comment process
as a defense in any securities related litigation against them.

Response: In the event that Prospect requests acceleration of the effective date of the
Form N-14 and/or Patriot requests clearance to mail the merger proxy statement contained therein to
its stockholders, each of Prospect and Patriot will furnish a letter, at the time of such request,
acknowledging that:

    •

    it is responsible for the adequacy and accuracy of the disclosure in the
filing relating to it;

    •

    should the SEC or the Staff declare the filing effective or clear the filing
for mailing to stockholders, it does not foreclose the SEC from taking any
action with respect to the filing;

    •

    the action of the SEC or the Staff in declaring the filing effective or
clearing the filing for mailing to stockholders, does not relieve it from its
full responsibility for the adequacy and accuracy of the disclosure in the
filing relating to it; and

    •

    it may not assert this action as defense in any proceeding initiated by the
SEC or any person under the federal securities laws of the United States.

* * *

Mr. Kevin Rupert

October 5, 2009

Page 6

     If you have any questions or additional comments concerning the foregoing, please contact the
undersigned at (202) 383-0176, Rick Prins of Skadden Arps Slate Meagher Flom LLP at (212) 735-2790
or Harry S. Pangas of Sutherland Asbill & Brennan LLP at (202) 383-0805.

    Sincerely,

    /s/ Steven B. Boehm

    Steven B. Boehm

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PROSPECT CAPITAL CORPORATION

10 East 40th Street, 44th Floor

New York, New York 10016

October
15, 2009

VIA EDGAR

Larry Greene, Esq.

Senior Counsel

Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Prospect Capital Corporation — Definitive Proxy Statement

Dear Mr. Greene:

          We are in receipt of oral comments provided by you on September 30, 2009 to Carmine Lekstutis
and Richard Prins of Skadden, Arps, Slate, Meagher and Flom LLP regarding Prospect Capital
Corporation’s (the “Company”) preliminary proxy statement filed on September 21, 2009.

          We have considered your comments and have made the responses and amendments to the Company’s definitive
proxy statement discussed below. For ease of reference, we have included your comments below
followed by our responses.

          Please note that pursuant to the phone conversation between you, Rich Pfordte, Richard Prins and Carmine Lekstutis on October 14, 2009, we will be including the Section 23(b) and Section 63(2) approval standards in the definitive
proxy statement and will notify you in the instance in which we have obtained 23(b) approval but not 63(2) approval to discuss further.

          The Company acknowledges that: (1) the Company is responsible for the adequacy and accuracy of
the disclosure in the filing; (2) staff comments or changes to disclosure in response to staff
comments do not foreclose the Securities and Exchange Commission from taking any action with
respect to the filing; and (3) the Company may not assert staff comments as a defense in any
proceeding initiated by the Securities and Exchange Commission or any person under the federal
securities laws of the United States.

Prospect Capital Corporation

October 15, 2009

Page 2

General Comments

Comment 1: Please ensure that there is disclosure in the proxy statement discussing a shareholder’
ability to revoke his or her proxy.

Response: We respectfully submit that such disclosure is included in the proxy
statement, including, for example: (i) in the letter accompanying the proxy
statement (“[i]f you attend the meeting, you may revoke your proxy prior to its
exercise and vote in person at the meeting”); (ii) on the first page of the proxy
statement (“[i]f you are a ‘stockholder of
record’ (i.e., you hold shares directly
in your name), you may revoke a proxy at any time before it is exercised by
notifying the Company’s Secretary in writing, by submitting a properly executed,
later-dated proxy, or by voting in person at the Meeting”); and (iii) in the section
entitled “Information Regarding This Solicitation” (“[a]ny proxy given pursuant to
this solicitation may be revoked by notice from the person giving the proxy at any
time before it is exercised”).

Comment 2: Please disclose in the proxy statement that the directors of the Company have consented
to being named in the proxy statement.

Response: The requested statement has been added under the section entitled
“Proposal I: Election of Directors” in the proxy statement.

Comment 3: Please prominently display each proposal that is to be voted on at the meeting other
than by capitalizing every word in the proposal section headings. In addition, please do not
capitalize every word in the various section headings throughout the proxy statement.

Response: The requested changes have been made.

Comment 4: Please consider revising the following statement: “RICs generally must distribute
substantially all of their earnings to stockholders as dividends in order to achieve pass-through
tax treatment, which prevents us from using those earnings to support new investments.” In
particular, please consider whether the disclosure that RICs receive “pass-through tax treatment”
is technically accurate.

Response: We have modified the disclosure to respond to your comment.

Prospect Capital Corporation

October 15, 2009

Page 3

Comment 5: Please format the table setting forth the Company’s high and low stock prices so that it
is easier for shareholders to read.

Response: The requested change has been made.

Comments to Proposal II (Approval of Sales of Common Stock Below NAV)

Comment 6:  Please consider moving
the last paragraph in the sub-section entitled “Conditions to Sale Below NAV” under Proposal II to
another place in the proxy statement.

Response: The requested change has been made.

Comment 7: Please include the disclosure contained in the Company’s current prospectus and
prospectus supplement discussing how sales of the Company’s stock at prices below NAV can benefit
the Company’s investment advisor. In addition, please disclose whether that are any limits on how
far below NAV the Company can sell shares of its common stock.

Response: The requested changes have been made.

* * * *

     If you have any questions or comments or require any additional information in connection with
the above, please telephone Richard Prins at (212) 735-2790 or Carmine Lekstutis at (212) 735-2132.

    Sincerely,

Prospect Capital Corporation

    /s/ Brian H. Oswald

    Name:
    Brian H. Oswald

    Title:
    Chief Financial Officer,
Chief Compliance Officer,
Treasurer and Secretary

CORRESP
1
filename1.htm

    procorrp.htm

    March 10, 2009

              Mr.
      Larry L. Greene

              United
      States Securities and Exchange Commission

              100
      F Street, N.E., Mail Stop 4720

              Washington,
      D.C. 20549

              RE:

              Prospect
      Capital Corporation (the "Company")

                File Nos. 814-00659
      & 333-143819

    Dear
Mr. Greene:

    We
are in receipt of comments provided by you over the phone during the week of
March 2, 2009 and by Richard Pfordte by phone on March 10, 2009 regarding the
Registration Statement on Form N-2 of the Company.

    The
Company has considered these comments and has authorized us to make on its
behalf the responses and changes to the Company's Registration Statement
discussed below.  These changes will be reflected in Post-Effective
Amendment No. 10 to the Company's Registration Statement.  We are
enclosing copies of pages changed to respond to these comments that have been
marked to show the Company's responses.

    The
Company's responses to the comments are set forth below.  For ease of
reference, a summary of each comment is set forth in italics and followed by the
corresponding response.

    1.  Please add an
undertaking that the Company will not do a takedown from the shelf registration
statement without a new post-effective amendment if the Company's accountants
have raised a growing concern issue.

    The
Company has made an explicit reference to the requested effect in its
undertakings.

    2.  Please explain the
statement in the "Use of Proceeds" regarding "to manage balance sheet
liquidity."

    The
Company has added further explanations each place this phrase
occurs.

      Mr.
Larry L. Greene

      March
10, 2009

      Page
2

    3.  Please add
additional details as previously requested regarding rights offerings if the
Company intends to be able to do such a rights offering through a prospectus
supplement.

    The
Company has deleted the ability to do a rights offering at a discount through a
prospectus supplement.  Inasmuch as the special concerns related to
rights offerings at a discount do not exist if the rights offering is at or
above NAV per share, the Company has not deleted the ability to complete such
offerings at or above NAV through a prospectus supplement.

    4.  Please provide us
with supplemental information regarding the credit facility commitment
previously referred to in the base prospectus under "Prospectus Summary — Recent
Developments."

    The
Company does not have a commitment for a new credit facility or a term sheet for
such a facility.  Rather, the Company has a commitment from Rabobank
to seek to form a syndicate of lenders that would provide a facility
commitment.  That is, the Company only has an agreement from the
potential arranger (equivalent to a placement agent in a securities offering) to
use its efforts to determine whether it can find other banks interested in
forming a group to provide a credit facility.  As a consequence there
are no terms at this date.

    5.  Please place the
expense example prior to the notes to the expense table.

    This
change has been made.

    6.  Please provide
additional detail regarding the types of offerings that may be accomplished
under the Prospectus.  Include such matters as agreements that are to
be filed, additional disclosures, associated types of selling compensation, any
differences in accounting between different types of offerings, any additional
FINRA issues, any differences in the conduct of an offering below NAV per share
or above NAV per share, whether any of the types of offerings described are
options subject to Section 61 of the 1940 Act and whether a shelf takedown could
be used to sell control of the Company.

    The
Company has deleted the optional cash purchase program offerings language as the
Company does not intend to make offerings on such basis.  The Company
has also expanded disclosure in "Plan of Distribution" to address the types of
issues raised by your comment to the extent applicable and not already covered
in the disclosure.

    The
Company believes that further disclosure regarding compensation is only
meaningful in the context of an actual particular offering, that there are no
additional FINRA issues at this stage of the process, that the plan of
distribution will not vary depending on whether the offering is at a price above
or below NAV per share, that the type of offerings covered by the Prospectus do
not include offerings of securities that would be options under Section 61 of
the 1940 Act and that the Company does not envision selling a controlling stake
to any investor through an offering under the Prospectus.

    7.  Please include a
form of prospectus supplement in the next filing.

      Mr.
Larry L. Greene

      March
10, 2009

      Page
3

    Amendment
No. 10 will include a form of prospectus supplement.

    8.  Please limit the
amount of NAV per share dilution from takedowns under the post-effective
amendment declared effective by the SEC to no more than 15%.

    The
requested change has been made.

    *          *          *         *

    You
also raised three general accounting issues not related to the registration
statement.

    A.           You noted that the June 30, 2008 Form
10-K filing did not have a conformed
signature for the auditor's report or the report on internal
controls.

    The
Company will refile the affected reports with appropriate conformed
signatures.

    B.           You asked whether the annual report to shareholders was
similarly affected.

    The
annual report also omitted conformed signatures.  We do not believe,
however, that any remailing to shareholders is required.

    C.           The Company's February 10, 2009 press
release failed to note that the statutory safe harbor for forward-looking
statements does not apply to business development companies.

    The
Company will update its press release template to correct this
point.

    We
believe that the above responses adequately respond to the concerns raised in
your comments.  Should you have any additional comments or concerns,
please feel free to contact me at (212) 735-2790.

                  Sincerely,

                  s/Richard
      T. Prins

    cc:     Grier
Eliasek

             Brian
Oswald

Joseph Ferraro

Prospect
Capital Corporation

          Filed
Pursuant to Rule 497(e)

          Registration
No. 333-143819

           PROSPECTUS
SUPPLEMENT

          (To
Prospectus dated March ___, 2009)

            _________
Shares

            Common
Stock

            $_____
per share

            Prospect
Capital Corporation is a financial services company that lends to and invests in
middle market, privately-held companies. We are organized as an
externally-managed, non-diversified closed-end management investment company
that has elected to be treated as a business development company under the
Investment Company Act of 1940. Prospect Capital Management LLC manages our
investments, and Prospect Administration LLC provides the administrative
services necessary for us to operate.

            We
are offering _____________ shares of our common stock directly to
institutional investors. We have not retained any underwriter or placement
agent, and we will not pay any commission or underwriting discount in connection
with this offering. See “Plan of Distribution” beginning on page S-__ of
this Prospectus Supplement for more information regarding this offering. These
shares are being offered at a discount from our most recently determined net
asset value per share pursuant to authority granted by our stockholders at the
annual meeting of shareholders held on February 12, 2009.  Sales of
common stock at prices below net asset value per share dilute the interests of
existing stockholders, have the effect of reducing our net asset value per share
and may reduce our market price per share.  See “Risk Factors”
beginning on page S - ____ and “Sales of Common Stock Below Net Asset Value” on
page S–__ of this prospectus supplement and on page 76 of the accompanying
prospectus.

            Our
common stock is traded on the NASDAQ Global Select Market under the symbol
“PSEC.” The last reported closing price for our common stock on __________, 2009
was $______ per share, and our most recently determined net asset value per
share was $______.

            This
prospectus supplement and the accompanying prospectus contain important
information you should know before investing in our securities. Please read it
before you invest and keep it for future reference. We file annual, quarterly
and current reports, proxy statements and other information about us with the
Securities and Exchange Commission, or the SEC. This information is available
free of charge by contacting us at 10 East 40th  Street, 44th Floor,
New York, NY 10016 or by telephone at (212) 448-0702. The SEC maintains a
website at www.sec.gov where such information is available without charge upon
written or oral request. Our Internet website address is www.prospectstreet.com.
Information contained on our website is not incorporated by reference into this
prospectus supplement or the accompanying prospectus and you should not consider
information contained on our website to be part of this prospectus.

            Investing
in our common stock involves risks. See “Risk Factors” beginning on page S–
__ of this prospectus supplement and on page 9 of the accompanying
prospectus.

            Neither
the SEC nor any state securities commission, nor any other regulatory body, has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

                            Per
      Share

                            Total

                          Public
      offering price

                        $

                        $

                          Proceeds
      to Prospect Capital Corporation, before expenses(1)

                        $

                        $

                      (1)

                      Before
      deducting estimated offering expenses payable by us of approximately
      $______.

            Prospectus
Supplement dated ________, 2009

                ii

                       You
should rely only on the information contained in this prospectus supplement and
the accompanying prospectus. We have not authorized any other person to provide
you with information that is different from that contained in this prospectus
supplement or the accompanying prospectus. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not making an
offer of these securities in any jurisdiction where the offer is not permitted.
You should assume that the information appearing in this prospectus supplement
and the accompanying prospectus is accurate only as of their respective dates.
Our business, financial condition and results of operations may have changed
since those dates. This prospectus supplement supersedes the accompanying
prospectus to the extent it contains information that is different from or in
addition to the information in that prospectus.

            TABLE OF CONTENTS

            PROSPECTUS
SUPPLEMENT

                      Prospectus
      Summary

                      S-1

                      Risk
      Factors

                      S-6

                      Use
      of Proceeds

                      S-7

                      Capitalization

                      S-8

                      Distributions
      and Price Range of Common Stock

                      S-9

                      Sales
      of Common Stock Below Net Asset Value

                      S-11

                      Plan
      of Distribution

                      S-14

                      Legal
      Matters

                      S-14

                      Independent
      Registered Public Accounting Firm

                      S-14

                      Available
      Information

                      S-14

              PROSPECTUS

                                About
      this Prospectus

                                ii

                                Prospectus
      Summary

                                1

                                Selected
      Condensed Financial Data

                                7

                                Risk
      Factors

                                9

                                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations

                                26

                                Report
      of Management on Internal Control Over Financial Reporting

                                47

                                Use
      of Proceeds

                                48

                                Forward-Looking
      Statements

                                49

                                Distributions

                                51

                                Price
      Range of Common Stock

                                53

                                Business

                                54

                                Management

                                60

                                Certain
      Relationships and Transactions

                                78

                                Control
      Persons and Principal Stockholders

                                79

                                Portfolio
      Companies

                                80

                                Determination
      of Net Asset Value

                                83

                                Sales
      of Common Stock Below Net Asset Value

                                84

                                Dividend
      Reinvestment Plan

                                88

                                Material
      U.S. Federal Income Tax Considerations

                                90

                                Description
      of our Capital Stock

                                97

                                Description
      of Our Preferred Stock

                                104

                                Description
      of Our Warrants

                                105

                                Description
      of Our Debt Securities

                                107

                                Regulation

                                109

                                Custodian,
      Transfer and Dividend Paying Agent and Registrar

                                116

                                Brokerage
      Allocation and Other Practices

                                117

                iii

                            Plan
      of Distribution

                            118

                            Legal
      Matters

                                                  120

                            Independent
      Registered Public Accounting Firm

                            120

                            Available
      Information

                            120

                            Index
      to Financial Statements

                            F-1

                          Part
      C -- Other Information
                          C-1

                iv

            The Offering

                      Common
      stock offered by us

                      _________ shares.

                      Common
      stock outstanding

                      prior
      to this offering

                      _________ shares.

                      Common

CORRESP
1
filename1.htm

    proscapcorresp.htm

February 27, 2009

              Mr.
      Larry L. Greene

              United
      States Securities and Exchange Commission

              100
      F Street, N.E., Mail Stop 4720

              Washington,
      D.C. 20549

              RE:

              Prospect
      Capital Corporation (the "Company")

                File Nos. 814-00659
      & 333-143819

    Dear
Mr. Greene:

    We
are in receipt of your comments of February 26, 2009 regarding the Registration
Statement on Form N-2 of the Company.

    The
Company has considered your comments and has authorized us to make on its behalf
the responses and changes to the Company's Registration Statement discussed
below.  These changes will be reflected in Post-Effective Amendment
No. 10 to the Company's Registration Statement.  We are enclosing
copies of pages changed to respond to your comments that have been marked to
show the Company's responses to your comments.  We have also included
a draft prospectus supplement.

    The
Company's responses to your comments are set forth below.  For ease of
reference, the text of each of your comments is set forth in italics and
followed by the corresponding response.

    Prospectus
Cover

    1.
The first paragraph indicates that the Company will offer various types of
securities: “to provide us with funds to . . . acquire investments that we
reasonably believe are in our acquisition
pipeline.”  (Emphasis added.)  Does the phrase
“acquisition pipeline” mean the same as “in accordance with our investment
objective and strategies?

    The
Company has determined to delete reference to use of proceeds on the
cover.  Please see responses to similar comments below relating to use
of proceeds sections.

    2.
The next sentence states that: “Securities may be offered at prices and on terms
to be disclosed in one or more supplements to this prospectus, possibly at a
discount to net asset value

        Mr.
Larry L. Greene

        February
27, 2009

        Page
2

    per
share in certain circumstances.”  Move this statement to a separate
paragraph, specify that common shares are the securities to be offered at below
net asset value, and indicate that sales below net asset value dilute existing
shareholders and have the effect of reducing net asset value.

    The
Company has revised the disclosure accordingly.

    3.
The paragraph towards the bottom of the page that begins with the phrase “This
prospectus contains important information . . .” should not appear in
bold.

    The
Company has revised the disclosure accordingly.

    Prospectus

    4.
Disclosure captioned “Prospectus Summary – The Offering” states that: “We may
offer, from time to time, in one or more offerings or series, together or
separately, up to $500,000,000 of our Securities to provide us with funds to
repay outstanding debt, and to acquire investments that we reasonably believe
are in our acquisition pipeline.”  Other similar disclosures reflect
other formulations reflecting other purposes for which the funds may be
used.  The statements should be consistent.

    The
Company has revised use of proceeds disclosure throughout to ensure conformity
of substance.

    5.
The last sentence of the second paragraph of this discussion indicates that in
certain circumstances the sale of Company shares may be at a discount to net
asset value which may be dilutive to stockholders.  The sentence
should be moved to a separate paragraph and the circumstances therein referred
to should be identified.  Disclose the risk that a sale of common
below net asset value dilutes existing shareholders, causes the net asset value
of the Company to drop, and has the effect of reducing the market price of
shares.  Add a cross reference to the discussion captioned “Sales of
Common Stock Below Net Asset Value.”

    The
Company has modified the disclosure as requested except that the Company
believes that sales below net asset value do not necessarily reduce the market
price of its common stock, particularly where the amount of dilution per share
is not material or where it is perceived that the sale will strengthen the
Company's financial position.

    Advise
the staff whether the Company could be simultaneously selling below net asset
value and making a distribution consisting of, in whole or in part, a return of
capital.

    The
Company does not anticipate that it would be simultaneously selling shares at a
discount and making distributions other than out of current or retained
income.

    6.
The discussion captioned “Prospectus Summary – Use of proceeds” states that the
net proceeds from the offering will be used to acquire: “new or additional
investments in portfolio companies in accordance with our investment objective
and strategies, repayment of then

        Mr.
Larry L. Greene

        February
27, 2009

        Page
3

    outstanding
indebtedness, acquisitions or
general corporate purposes.”  (Emphasis added.)  Please
advise the staff whether “acquisitions” is synonymous with “new or additional
investments.”

    The
term “acquisitions” has been deleted but was intended to be synonymous with “new
or additional investments.”

    7.
The discussion captioned “Prospectus Summary – Recent Developments” indicates
that the Company has entered into a commitment establishing a dual rated credit
facility.  Indicate whether the facility is secured by a pledge of
assets.  If so, disclose the details.

    This
item has been removed as it is no longer a recent development.  For
the information of the staff the commitment was solely to arrange a facility and
was not itself a commitment for a facility on any particular
terms.  Accordingly, it is not known whether the facility will be
secured although the Company expects that it will be.

    8.
The proviso paragraph following the caption “Example” in the fee table contains
the following clause: “we have assumed we would have borrowed all $200 million
available under our line of credit.”  Is this assumed in the fee table
above?  If not, why assume that amount in the Example
only?  Is the Company currently at such level of
borrowing?  If not, does it intend to borrow all $200
million?

    The
third sentence of the first paragraph under “Fees and Expenses” states that same
assumption for all of the tables.  As disclosed, the Company had
approximately $134 million of debt outstanding at December 31,
2008.  The Company does not intend to borrow the full $200 million in
the current market environment.

    9.
In light of the Company’s total annual expenses, the expenses in the example
appear to be understated.  Please confirm the accuracy of that
information.

    The
Company hereby confirms the accuracy of the information in the
tables.

    10.
Footnote 8 to the fee table indicates that Other Expenses is based on annualized
expenses during the quarter ended September 30, 2008.  Please update
that information.

    The
Company has revised the item Other Expenses in the fee table to reflect the
Company's annualized expenses during the quarter ended December 31,
2008.  Footnote 8 to this fee table also has been revised
accordingly.  The Company has moved the Example table to the note
relating thereto and has revised the note to more accurately reflect the
instructions to that table in Form N-2.

    11.
The “Selected Condensed Financial Data” states that it is “For the Year/Period
Ended June 30.”  If not effective on or about March 2, 2009, the
Company will need to update the information to comply with 17 CFR Reg. 210.3-18
of Regulation S-X.  Later in the table other information appears as
of, or “For the Three Months ended September 30.”   This
information should be updated to December 31.

        Mr.
Larry L. Greene

        February
27, 2009

        Page
4

    The
Company has updated the prospectus for December 31, 2008 financial
information.

    12.
Under the caption “Risk Factors” it is disclosed that “We have asked our
stockholders for approval for us to be able to sell an unlimited number of
shares of our common stock at any level of discount from net asset value per
share in accordance
with the exception described above in . . .”  Revise the
disclosure to indicate whether shareholders approved the sales of shares below
net asset value, and if so, when that approval expires.  Similarly,
revise disclosure on this topic appearing under the later captioned discussion,
“Sales of Common Stock Below Net Asset Value.”  With respect to the
underlined clause, clarify the referenced exception.

    The
Company has updated and expanded the disclosure as requested.  The
Company believes the cross-reference to the exact terms of the exception is
explicit and that it would interfere with communicating the substance of the
risk factor to repeat the nine lines of text describing the
exception.  Accordingly, the Company has not altered the
cross-reference in that regard.

    13.
Revise the first paragraph of the discussion captioned “Use of Proceeds” adding
the substance of the first underlined clause and substitute the word
“specifically” in place of the second underlined clause, as follows: “Unless
otherwise specified in a prospectus supplement, we intend to use the net
proceeds from selling Securities pursuant to this prospectus, including the proceeds of
sales below net asset value, for investment in portfolio companies in
accordance with our investment objective and strategies, repayment of then
outstanding indebtedness, acquisitions or general corporate
purposes.  A supplement to this prospectus relating to each offering
will more fully
identify the use of the proceeds from such offering including any intention to
utilize proceeds to pay expenses in order to avoid sales of long-term
assets.”  (Emphasis added.)  In addition, disclose the
nature or general type of considerations that would lead the board to conclude
that the sale of Company securities at below net asset value might be of benefit
to current shareholders.

    The
first paragraph contains the underscored language as requested.  The
Company does not believe it appropriate to substitute the word “specifically”
for the phrase “more fully” inasmuch as it may in fact not have any more
detailed plans for such proceeds at the time of the offering.  The
Company has revised the disclosure to clarify this point.  The Company
has also expanded disclosure of the type of factors the directors would be
expected to consider.

    14.
The discussion captioned “Sales of Common Stock Below Net Asset Value” indicates
that the Company might engage in rights offerings.  In that
connection, note that any such offering should be based on the factors and
determinations discussed in Investment Company Act Release No. 9932 (September
15, 1977) with respect to rights offerings.  In particular, the
disclosure should address the matters discussed in Item 2(E) and related
footnote 13 of that release reflecting the staff’s view that there should be a
specific intended use for the offering proceeds and disclose it under the
caption “Use of Proceeds.”  The disclosure should indicate that the
offering is designed to raise funds to be invested consistent with the Company’s
investment objectives and policies depending on conditions for the types of
securities in which the Company typically invests.

        Mr.
Larry L. Greene

        February
27, 2009

        Page
5

    The
Company does not believe that detailed disclosure regarding a rights offering is
appropriate in the base prospectus.  The role of the Board of
Directors and the disclosure vary considerably depending on whether the rights
are transferable or nontransferable and on other factors, none of which have
been considered as no rights offering is under consideration at this time and
all of which would be described in the prospectus supplement for the rights
offering.

    Please
disclose the aggregate limitation on the amount of discount in any one
offering the Company may make under the shelf registration, and whether the
Company has an aggregate ceiling on the amount of discount of all offerings made
by the Company under the shelf, the excess of which would trigger the need for a
post-effective amendment to the shelf offering.

    The
Company does not believe there should be any limitation on the amount of
discount in any particular offering as its stockholders did not approve any
restrictions.  The Company believes that the aggregate dilution due to
offerings under the shelf prior to the Company being required to file a
post-effective amendment to the Registration Statement should be 25%, which
would be measured in each offering under a particular amendment by multiplying
the difference between the most recently calculated NAV per share and the public
offering price times the number of shares sold in the offering and than
comparing the sum of such amounts for all such offerings to the aggregate NAV of
the Company most recently determined prior to the effectiveness of the amendment
pursuant to which such offerings are made.  Disclosure of this
standard has been added at the end of the section under a new
sub-heading.

    The
last sentence of the first paragraph indicates that the Company could also sell
shares of common stock below net asset value per share in certain other
circumstances, including rights offerings.  Specify the other
circumstances.

    Rights
offerings are effectively the only other type of discounted offering the Company
could currently make, and the Company has modified the disclosure
accordingly.

    15.
Add disclosure indicating that the adviser benefits from the sale of equity and
debt securities, including sales of common below net asset value, why that is
the case, and the impact of this conflict of interest on the Company and its
shareholders.

    The
Company has added disclosure on this point at the end of the introductory
paragraphs.

    16.
Confirm that the line item captioned “Investment Per Share Held by Stockholder
A,” under the sub-caption “Impact On Existing Stockholders Who Do Not
Participate” is correct in the case of Examples 1 – 3.

    The
Company confirms the accuracy of the calculations in these
examples.

    17.
The following disclosure appearing under the sub-caption “Impact On Existing
Stockholders Who Do Participate,” particularly the underlined clause below,
suggests that the dilutive effect of an offering below net asset value may be
mitigated to the extent a shareholder buys a large enough portion of the
offering.  Revise the disclosure to take away this notion: “Our

        Mr.
Larry L. Greene

        February
27, 2009

        Page
6

    existing
stockholders who participate in an offering below NAV per share or who buy
additional shares in the secondary market at the same or lower price as
we obtain in the offering (after expenses and commissions) will experience
the same types of dilution as the nonparticipating stockholders, albeit at a lower
level, to the
extent they purchase less than the same percentage of the discounted
offering as their interest in our shares immediately prior to the
offering.”  (Emphasis added.)

    The
Company understands this comment to request that any disclosure regarding the
impact on NAV for participating investors be balanced with discussion of the
potential market price dilution to such investors.  The Company does
believe that the section should be retained, inasmuch as, similar to a rights
offering, it is important to explain to potential investors the impact of
participating as well as not participating.  Accordingly, the Company
has added additional disclosure.

    18.
The first paragraph of the discussion captioned “Plan of Distribution” lists
four ways that Company securities may be sold.  Item (b) states the
following: “(b) directly to a limited number of purchasers or to a single
purchaser, including existing stockholders in a rights
offering.”  Clarify the d

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
INVESTMENT MANAGEMENT
Richard T. Prins
Skadden Ars Slate Meagher
& Flom LLP
4 Times Square
New York, New York 10036
Re: Prospect Capital Corporation (the "Fund")
File Numbers 814-0.0659 & 333-143819
Dear Mr. Prins:
On Januar 29,2009, the Fund filed post-effective amendment No.9 to its
registration statement on Form N-2 under the Securities Act of 1933 ("Securties Act").
Your letter of even date accompaned the filing. With certain exceptions, we have
limited our review of the filing. The Fund is a business development company
("BDC") regulated under the Investment Company Act of 1940 ("1940 Act"). The filing
was made to amend the Fund's universal shelf offering, pursuant to Rule 415 under the
Securities Act to sell shares of common stock, including shares subscribed for by rights,
at a price below net asset value.
Our comments regarding the filing are set forth below.
Prospectus Cover
1. The first paragraph indicates that the Fund will offer various types of securties:
"to provide us with fuds to . . . acquire investments that we reasonably believe are in our
acquisition pipeline." (Emphasis added.) Does the phrase "acquisition pipeline" mean
the same as "in accordance with our investment objective and strategies?"
2. The next sentence states that: "Securties may be offered at prices and on terms to
be disclosed in one or more supplements to this prospectus, possibly at a discount to net
asset value per share in certain circumstances." Move this statement to a separate
paragraph, specify that common shares are the securities to b~ offered at below net asset
value, and indicate that sales below net asset value dilute existing shareholders and have
the effect of reducing net asset value.
3. The paragraph towards the bottom of the page that begins with the phrase "This
prospectus contains important information. . ." should not appear in bold.
Prospectus
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4. Disclosure captioned "Prospectus Sumary - The Offering" states that: "We may
offer, from time to time, in one or more offerings or series, together or separately, up to
$500,000,000 of our Securities to provide us with funds to repay outstanding debt, and to
acquire investments that we reasonably believe are in our acquisition pipeline." Other
similar disclosures reflect other formulations reflecting other purposes for which the
funds may be used. The statements should be consistent.
5. The last sentence ofthe second paragraph of this discussion indicates that in
certain circumstances the sale of Fund shares may be at a discount to net asset value
which may be dilutive to stockholders. The sentence should be moved to a separate
paragraph and the circumstances therein referred to should be identified. Disclose the
risk that asale of common below net asset value dilutes existing shareholders, causes the
net asset value of the Fund to drop, and has the effect of reducing the market price of
shares. Add a cross reference to the discussion captioned "Sales of Common Stock
Below Net Asset Value."
Advise the staff whether the Fund could be simultaneously selling below net asset
value and making a distribution consisting of, in whole or in par, a retur of capitaL.
6. The discussion captioned "Prospectus Summar - Use of proceeds" states that the
net proceeds from the offering wil be used to acquie: "new or additional investments in
portfolio companies in accordance with our investment objective and strategies,
repayment of then outstanding indebtedness, acquisitions or gèneralcorporate puroses."
(Emphasis added.) Please advise the staffwhether "acquisitions" is synonymous with
"new or additional investments."
7. The discussion captioned "Prospectus Sumar - Recent Developments"
indicates that the Fund has entered into a commitment establishing a dual rated credit
facility. Indicate whether the facility is secured by a pledge of assets. If so, disclose the
details.
8. The proviso paragraph following the caption "Example" in the fee table contains
the following clause: "we have assumed we would have borrowed all $200 million
available under our line of credit." Is this assumed in the fee table above? Ifnot, why
assume that amount in the Example only? .Is the Fund curently at such level of
borrowing? Ifnot, does it intend to borrow all $200 millon?
9. In light ofthe Fund's total annual expenses, the expenses in the example appear to
be understated. Please confirm the accuracy of that information.
10. Footnote 8 to the fee table indicates that Other Expenses is based on anualized
expenses during the quarter ended September 30, 2008. Please update that information.
11. The "Selected Condensed Financial Data" states that it is "For the Year/Period
Ended June 30." Ifnot effective on or about March 2,2009, the Fund will need to update
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the information to comply with 17 CFR Reg. 210.3-18 of Regulation S-x. Later in the
table other information appears as of, or .'For the Three Months ended September 30."
This information should be updated to December 31.
12. Under the caption "Risk Factors" it is disclosed that "We have asked our
stockholders for approval for us to be able to sell an unlimited number of shares of our
common stock at any level of discount from net asset value per share in accordance with
the exception described above in . . ." Revise the disclosure to indicate whether
shareholders approved the sales of shares below net asset value, and if so, when that
approval expires. Similarly, revise disclosure on this topic appearng under the later
captioned discussion, "Sales of Common Stock Below Net Asset Value." With respect to
the underlined clause, clarify the referenced exception.
13.. Revise the first paragraph ofthe discussion captioned "Use of Proceeds" adding
the substance of the first underlined clause.and substitute the word "specifically" in place
ofthe second underlined clause, as follows: "Unless otherwise specified in a prospectus.
supplement, we intend to use the net proceeds from sellng Securties pursuant to this
pro~pectus, including the proceeds of sales below net asset value, for investment in
portfolio companes in accordance with our investment objective and strategies,
repayment ofthen outstanding indebtedness, acquisitions or general corporate
puroses. A supplement to this prospectus relating to each offering wil more fully
identify the use of the proceeds from such offering including any intention to utilize
proceeds to pay expenses in order to avoid sales oflong-term assets." (Emphasis added.)
In addition, disclose the natue or general tye of considerations that would lead the
board to conclude that the sale of Fund securities at below net asset value might be of
benefit to curent shareholders.
i 4. The discussion captioned .'Sales of Common Stock Below Net Asset Value"
indicates that the Fund might engage in rights offerings. In that connection, note that any
such offering should be based on the factors and determinations discussed in Investment
Company Act Release No. 9932 (September 15, 1977) with respect to rights offerings. In
paricular, the disclosure should address the matters discussed in Item 2(E) and related
footnote 13 of that release reflecting the staffs view that there should be a specific
intended use for the offering proceeds and disclose it under the caption '.Use of
Proceeds." The disclosure should indicate that the offering is designed to raise fuds to
be invested consistent with the Fund's investment objectives and policies depending on
conditions forthetypesof securties in which the Fund typically invests.
Please disclose the aggregate limitation on the amount of discount in anyone
offering the Fund may make under the shelf registration, and whether the Fund has an
aggregate ceiling on the amount of discount of all offerings made by the Fund under the
shelf, the excess of which would trigger the need for a post-effective amendment to the
shelf offering.
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The last sentence of the first paragraph indicates that the Fund could also sell
shares of common stock below net asset value per share in certain other circumstances,
including rights offerings. Specify the other circumstances.
15. Add disclosure indicating that the adviser benefits from the sale of equity and
debt securties, including sales of common below net asset value, why that is the case,
and the impact of this conflict of interest on the Fund and its shareholders.
.16. Confirm that the line item captioned "Investment Per Share Held by Stockholder
A," under the sub-caption "hnpact On Existing Stockholders Who Do Not Paricipate" is
correct in the case of Examples 1 - 3.
17. The following disclosure appearing under the sub-caption "hnpact On Existing
Stockholders Who Do Participate," particularly the underlined clause below, suggests
that the dilutive effect of an offering below net asset value may be mitigated to the extent
a shareholder buys a large enough portion of the offerig. Revise the disclosure to take
away ths notion: "Our existing stockholders who participate in an offering below NA V
per share or who buy additional shares in the secondar market at the same or lower price
as we obtain in the offering (after expenses and commissions) wil experience the same
types of dilution as the nonparicipating stockholders, albeit at a lower leveL. to the extent
they purchase less than the same percentage of the discounted offering as their interest in
our shares immediately prior to the offering."(Emphasis added.)
18. The first paragraph of the discussion captioned "Plan of Distrbution" lists fourways that Fund securities may be sold. Item (b) states the following: "(b) directly to a
limited number of purchasers or to a single purchaser, including existing stockholders in
a rights offering." Clarfy the disclosure so as to indicate the type of offering
contemplated by this provision. Furher, if this is a private offering, indicate the extent to
which it may be integrated with other offerings by the Fund.
19. The second paragraph under this caption states: "If so indicated in the applicable
prospectus supplement, we will authorize underwriters or other persons acting as our
agents to solicit offers by certain institutions to purchase the Securties from Us pursuant
to contracts providing for payment and delivery on a future date," Explain to the staff
more fully the nature and operation of these contracts. For example, àre purchasers
subject to these contracts obligated to take delivery of securties at the election ofthe
Fund. Explain the connection, if any, between these contracts, and optional cash
purchase plans and designated offeree programs briefly mentioned earlier under
.'Prospectus Summary - Plan of Distribution." If the latter plans and programs are not
related to the contracts, then explain to the staffhow the plans and programs arestructured and why investing through these means is different than regular way investing
in the Fund.
** ** * * ** * **
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We note that portions of the filing are incomplete. We may have additional
comments on such portions when you complete them in a pre-effective amendment, on
disclosures made in response to this letter, on information supplied in your response
letter, or on exhibits added in any pre-effective amendments.
Whenever a comment is made in one location, it is considered applicable to all
similar disclosure appearing elsewhere in the registration statement.
Response to this letter should be in the form of a pre-effective amendment filed
pursuant to Rule 472 under the Securities Act. Where no change will be made in the
fiing in response to a comment, please indicate this fact in your response letter and
briefly state the basis for your position. Where changes are made in response to our
comments provide information regarding the natue ofthe change and, if appropriate, the
location of such new or revised disclosure in the amended fiing. As required by the rule,
please insure that you mark new or revised disclosure to indicate change.
Please advise us if you have submitted or expect to submit an exemptive
application or no-action reqnest in connection with your registration statement.
You should review and comply with all applicable requirements of the federal
securities laws in connection with the preparation and distribution of a preliminary
prospectus.
We urge all persons who are responsible for the accurácy and adequacy of thedisclosure in the filings reviewed by the staffto be certain that they have provided all
information investors require for an informed decision. Since the Fund and its
management are in possession of all facts relating to the Fund's disclosure, they areresponsible for the accuracy and adequacy ofthe disclosures they have made.
In the event the Fund requests acceleration ofthe effective date ofthe pending
registration statement, it should fuish a letter, at the time of such request,
acknowledging that
· the Fund is responsible for the adeqúacy and accuracy ofthe disclosure in
the fiing;
· should the Commission or the staff, acting pursuant to. delegated authority,
declare the fiing effective, it does not foreclose the Commission from
taking any action with respect to the filing;
· the action ofthe Commission or the staff, acting pursuant to delegated
authority, in declarng the filing effective, does not relieve the Fund from
its full responsibility for the adequacy and accuracy ofthe disclosure in
the filing; and
· the Fund may not assert this action as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the
United States.
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In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Investment Management in
connection with our review of your filing or in response to our comments on your fiing.
We will consider a written request for acceleration of the effective date of the
registration statement as confiration of the fact that those requesting acceleration are
aware of their respective responsibilities.
Should you have any questions regarding this letter, please contact me at (202)
551-6976.
Sincerely, _. fl .~.~. Lary L~
Senior Counsel
Tuesday, Februar 24,2009
~
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CORRESP
1
filename1.htm

LETTER TO THE S.E.C.

Prospect Capital Corporation

10 East 40th Street • 44th Floor • New York, New York 10016

October 2, 2008

VIA EDGAR AND BY COURIER

Mr. Larry Green

Division of Investment Management

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Mail Stop 0123

    Re:

    Prospect Capital Corporation

Preliminary Proxy Statement on Schedule 14A

Filed on September 18, 2008

File Number 814-00659

Dear Mr. Green:

          Set forth below are the responses of Prospect Capital Corporation (the “Company”), to the
comments of the staff of the Division of Investment Management (the “Staff”) of the Securities and
Exchange Commission (the “Commission”), received by the undersigned by telephone on September 23,
2008, with respect to the Preliminary Schedule 14A filed by the Company on September 18, 2008 (the
“Proxy Statement”).

Notice

    1.

    Please confirm that the Company will file a post-effective amendment pursuant to
Section 8(c) of the Securities Act in connection with any offering of shares below Net
Asset Value (“NAV”) or warrants, options or rights.

    In response to this comment, we advise the Staff that we believe that to require the
Company to file a post-effective amendment before conducting any offering at a price below
its NAV, or before conducting any offering of warrants, options or rights, could prevent
the Company from being able to conduct offerings, would place the Company at a competitive
disadvantage relative to other business development companies (“BDCs”) and would be
disadvantageous to the Company’s stockholders.

    First, most common stock offerings over the last year or two by the Company and by other
BDCs have been structured as “overnight offerings,” meaning that the offering is either
priced after the close of the market on one day and orders are confirmed prior to the
opening of the market the following day or indications of interest are taken after the
close one day and the pricing occurs before the opening of the market the following day,
with orders taken immediately thereafter. Overnight offerings are intended to minimize the
market impact of the pendency of an offering. These offerings are highly dependent on the
shelf offering process under which offerings can be launched without the need for review of
disclosure documents by the Commission or for a declaration of effectiveness. It does not
appear that an overnight offering could be undertaken if the

    Mr. Larry Green

    Securities and Exchange Commission

    Page 2

    October 2, 2008

    issuer were required to file a post-effective amendment in connection with the offering.
Thus, to impose this requirement on the Company would have the effect of denying the
Company access to the capital markets through what has become the dominant offering process
for BDCs.

    The requirement to file a post-effective amendment before conducting any offering at a
price below its NAV, or before conducting any offering of warrants, options or rights would
also place the Company at a competitive disadvantage relative to other BDCs. In particular,
there are a number of BDCs whose shelf registration statements were declared effective this
year that were not subject to this requirement. These companies therefore have available to
them the shelf registration process that is a necessary ingredient to an overnight offering
 — and because they do have the shelf registration process available to them, with its
certainty on timing, they have a distinct advantage in attracting underwriters to assist in
their offerings of common stock.

    As mentioned above, one of the primary benefits of overnight offerings is the minimization
of the adverse impact of the public announcement of an offering by a company on the price
of such company’s common stock. If the Company were required to file a post-effective
amendment prior to conducting an offering, the price of the Company’s common stock would be
adversely affected by publicity surrounding the filing. This would result in the Company
receiving a lower price per share when it eventually was able to conduct the offering after
the post-effective amendment was declared effective. The delay imposed by the filing of the
post-effective amendment and the resultant signaling to the market clearly would not be in
the best interests of the Company’s stockholders.

    So-called “overnight” deals have become the predominant method of BDC offerings because the
short selling community has found that short selling into any and all BDC offerings, often
without complying with law and regulations, has created a “self fulfilling” prophecy
whereby these short sellers almost always make money if they short sell upon the first
publicity and cover by purchasing in the offering, whether or not they are permitted to do
so by applicable law and regulations. Overnight offerings, in which the fact of the
offering is made known to the entire retail systems of the underwriting brokers the night
before pricing and first trading of the new issue, do not deny any market participants the
steady flow of accurate and timely information required for effective and fair markets.
These overnight offerings do make it more difficult for short sellers, some of whom may not
be in full compliance with all applicable laws and regulations, from manipulating a BDC’s
stock downward just as an offering is priced, thereby enabling them to cover at often
significantly lower prices than where they sold short, and possibly disrupt an offering and
send the BDC stock into a tailspin that will make them more money. While short sellers may
be the primary creators of this depressive effect on a BDC stock price just as an offering
prices, we believe that ordinary selling at such a time in light of the “self fulfilling”
prophecy magnifies that negative effect. We also believe that this depressive effect is

    Mr. Larry Green

    Securities and Exchange Commission

    Page 3

    October 2, 2008

    further magnified by short sellers working in concert, by the requirement that underwriters
cease making markets during an offering, by the news blackout then required, and by other
factors. Accordingly, we believe that not requiring a post-effective amendment, a decision
made with respect to other BDCs, is the correct decision, because it preserves to the BDC
access to the national capital markets in an equitable and fair way, permitting orderly
underwritings free from the manipulations of others serving their own ends, ends which may
not be consistent with fair and orderly markets, and the important role of BDCs in
providing capital to middle market companies, a role as important today, as ever, if not
more important than ever before. If the Company is not permitted to raise capital
without a post-effective amendment being pre-cleared, the Company’s access to the capital
markets will be severely constrained on any terms, and perhaps denied all together, not at
all the intent of Congress.

Notice, Page 2 and the Proxy Card

    2.

    Please identify the types of securities that will be authorized for issuance under
Proposal IV.

    In response to this comment, Proposal IV has been modified to include the following
language, which specifies the type of securities that may be authorized:

“To consider and vote upon a proposal to authorize the Company, with
approval of its Board of Directors, to issue warrants, options and rights to
subscribe to, convert to, or purchase shares of the Company’s common stock
in one or more offerings.”

Page 3

    3.

    Under the section “Additional Solicitation,” please address how broker non-votes and
abstentions will be handled if a stockholder vote is called.

    In response to this comment, we have modified the end of the first paragraph of the section
entitled “Additional Solicitation” to include that abstentions will not be included in
determining the number of votes cast and, as a result, will have no effect for such
purposes. We do not expect there to be any broker non-votes to a stockholder vote relating
to adjournment.

Page 5

    4.

    Please make clear in Proposal I — Election of Directors, that each of the nominees
has agreed to being named in the proxy statement.

    In response to this comment, we have added language to Proposal I that makes it clear that
each of the nominees has agreed to being named in the proxy statement.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 4

    October 2, 2008

Page 17

    5.

    We do not believe that the footnote (1) is necessary

    In response to this comment, we have removed the footnote.

Page 21

    6.

    In the first paragraph under Proposal IV, we do not believe that a BDC can issue
convertible preferred stock and convertible debentures. Please revise the disclosure
appropriately.

    In response to this comment, we respectfully advise the Staff that we disagree with its
assertion that a BDC cannot issue convertible securities. We reference Section 61(a)(3) of
the Investment Company Act of 1940 (the “1940 Act”), which provides:

(3) “Notwithstanding section 18(d)...a business development company may
issue warrants, options, or rights to subscribe or convert to voting
securities of such company, accompanied by securities, if ...”

    It is clear that under the 1940 Act, a business development company may issue debt
securities or preferred stock. It is equally clear that Section 61(a)(3) of the 1940 Act
permits a business development company to issue warrants, options, or rights that can
convert into common stock if the conditions of that section are met. This would include a
convertible debt security or convertible preferred stock, which are effectively debt or
preferred stock coupled with a right to convert to common stock. In addition, we believe
that it is the Commission and the Staff’s position that a business development company may
issue convertible securities, provided the issuance does not violate Section 18(d) of the
1940 Act.

    The ability of a closed-end fund and the ability of a business development company to issue
convertible securities is long-established. On two occasions when the Commission or the
Staff addressed the question of whether a convertible security can be issued by an
investment company without violating Section 18(d) of the 1940 Act, the Commission and the
Staff have indicated that the primary issue in this determination is whether the conversion
feature is “predominant.” See Allegheny Corp., 37 SEC 424 (1956); Bunker Hill
Income Securities Inc., File No. 811-2392 (available October 29, 1982).

    In Allegheny, the Commission held that a convertibility option did not bring a
security within Section 18(d), so long as the right to purchase the common stock on
conversion did not so dominate the investment characteristics of the senior securities as
to make that security, in substance, not a senior security but a right to purchase within
the meaning of Section 18(d). The Commission later acknowledged that a closed-end fund may
issue convertible securities in Investment Company Act Release No. 5632 (March 12, 1969)
(“Release 5632). In Release 5632, the Commission provided checklists for

    Mr. Larry Green

    Securities and Exchange Commission

    Page 5

    October 2, 2008

    registration statements being filed under the 1940 Act. On the checklist for the Form S-4
(used by closed-end investment companies at that time), question 34 provides: “If
convertible debt or convertible preferreds are proposed to be offered, are the conversion
rates such that the security would not be a warrant prohibited by Section 18(d) of the
Investment Company Act? (See Alleghany Corporation 37 S.E.C. 424.).” Release 5632 makes it
evident that the Commission believed that the issuance of convertible securities by
closed-end funds was not an unusual occurrence and was permitted as long as it did not
violate Section 18(d) of the 1940 Act (i.e., the conversion feature could not be the
dominant feature as discussed in Allegheny).*

    In Bunker Hill, the issuer, sought assurances from the Staff that it would not recommend
action against it for issuing convertible debt securities. In response, the Commission
cited Allegheny and reaffirmed that Section 18(d) only prohibited convertible
securities where the convertibility feature is the predominant factor in the market value
of the security at its issuance. The Commission also stated that “where the conversion
feature predominates among a security’s investment characteristics, the bar of [s]ection
18(d) applies, and where it does not, [s]ection 18(d) does not apply.”

    It is clear from these examples that the Commission has adopted the position that the
issuance by closed-end funds and business development companies of convertible securities,
including convertible debt or convertible preferred securities, is permissible and does not
violate Section 18(d) as long as the conversion feature is not predominant. It is only
when the conversion option is dominant that Section 18(d) would be violated, and in that
case, a business development company must look to Section 61(a)(3), which allows a business
development company to, among other things, issue a security with the option to convert to
common stock upon obtaining shareholder approval. The purpose of Proposal IV is to obtain
that approval. If obtained, the Company could issue such convertible securities, subject
to the other requirements of Section 61(a)(3).

          In connection with responding to the comments of the Staff with respect to the Proxy
Statement, we acknowledge the following:

    •

    the Company is responsible for the adequacy and accuracy of the disclosure in
the filing;

    •

    Staff comments or changes to disclosure in response to Staff comments do not
foreclose the Securities and Exchange Commission from taking any action with respect
to the filing; and

    *

    We are aware of a closed-end fund, Royce Value Trust,
Inc., having issued a convertible security in the 1990’s that we understand
included the submission to the Staff of an “Allegheny” analysis for Section
18(d) purposes.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 6

    October 2, 2008

    •

    the Company may not assert Staff comments as a defense in any proceeding
initiated by the Securities and Exchange Commission or any person under the federal
securities laws of the United States.

               We respectfully request that additional comments, if any, in connection with the subject
filing be directed to Clifford Chance US LLP, Attention: Andrew S. Epstein, Esq., and Leonard
Mackey, Jr., Esq., 31 West 52nd Street, New York, New York 10019, telephone (212)
878-8000, facsimile (212) 878-8375, and me.

    Very truly yours,

    Prospect Capital Corporation

    /s/ Brian H. Oswald

    Brian H. Oswald

    Managing Director

    cc:

    John F. Barry III

M. Grier Eliasek

Andrew S. Epstein

CORRESP
1
filename1.htm

CORRESP

July 22, 2008

VIA EDGAR AND BY COURIER

Mr. Larry Green

Division of Investment Management

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Mail Stop 0123

    Re:

    Prospect Capital Corporation

Registration Statement on Form N-2

Post-Effective Amendment No. 8

Filed on July 2, 2008

File Number 333-143819

Dear Mr. Green,

On behalf of our client, Prospect Capital Corporation (the “Company”), set forth below are the
responses of the Company to the comments of the staff of the Division of Investment Management of
the Securities and Exchange Commission (the “Staff”), received by telephone on July 17, 2008, with
respect to Post-Effective Amendment No. 8 (“Amendment No. 8”) to the Registration Statement (the
“Registration Statement”) on Form N-2 (Registration No. 333-143819) filed by the Company on July 2,
2008.

Pursuant to a conversation between the Company and Mr. Larry Green on July 21, 2008 (the “July 21
Teleconference”), the Company will include the requested change discussed under Response No. 2
below in the prospectus the Company intends to file pursuant to Rule 497 promulgated under the
Securities Act of 1933, as amended (the “Securities Act”) after Amendment No. 8 is declared
effective. Unless otherwise indicated, page references in the description of the Staff’s comments
and the Company’s responses refer to Amendment No. 8.

General

    1.

    In addition to Response No. 2 contained in your response letter dated July 2, 2008,
please confirm that other than updates relating to financial information there have been no
material changes in the post-effective amendment.

    In response to this Comment, we confirm to the Staff that other than updates to financial
information and updates made in compliance with Section 10(a)(3) of the Securities Act,
there are no material changes included in Amendment No. 8.

Risk Factors

Regulations
governing our operation as a business development company affect our ability to raise, and the way in which we raise, additional capital, page 12 - 13

    Mr. Larry Green

    Securities and Exchange Commission

    Page 2

    July 22, 2008

    2.

    Please revise the second paragraph of this Risk Factor beginning with the words “As a
business development company regulated under provisions of the Investment Company Act of
1940, as amended (the “1940 Act”),” to clarify that this paragraph does not refer to the
Company specifically, but is included to provide a brief, general overview of certain
limitations imposed on any business development company’s ability to issue securities under
the 1940 Act.

    In response to this Comment, as described above, we will include the requested disclosure in
the second paragraph under “Risk Factors—Risks Relating To Our Business And
Structure—Regulations governing our operation as a business development company affect our
ability to raise, and the way in which we raise, additional capital” on page 13, to reflect
that the discussion in this paragraph refers to business development companies generally and
not the Company specifically, in the prospectus the Company will file under Rule 497
promulgated under the Securities Act. The relevant disclosure will be revised to:

Business development companies regulated under provisions of the 1940 Act, are
not generally able to issue and sell common stock at a price below the current
NAV per share of such common stock. A business development company may,
however, sell its common stock, or warrants, options or rights to acquire the
business development company’s common stock, at a price below the current NAV
of its common stock in a rights offering to stockholders or if (I) the business
development company’s board of directors determines that such sale is in the
business development company’s and its stockholders’ best interests, (2) the
stockholders approve the sale of the common stock at a price that is less than
the current NAV, and (3) the price at which the common stock is to be issued
and sold may not be less than a price which, in the determination of the board
of directors, closely approximates the market value of these securities (less
any sales load).

Part C—Other Information, page 6

    3.

    Please revise the disclosure to include an undertaking that you will file a
post-effective amendment pursuant to Section 8(c) of the Securities Act in connection with
any offering of your securities below net asset value.

    In response to this Comment, as discussed during the July 21 Teleconference, the Company
hereby undertakes to file a post-effective amendment pursuant to Section 8(c) of the
Securities Act prior to any offering by the Company of its common stock below net asset
value instead of revising the Undertakings section contained in Part C of the Registration
Statement.

    In addition, to the extent the Company files another post-effective amendment for the
purpose of a material update to the Registration Statement or files a new registration
statement on Form N-2, the Company will include a similar undertaking in Part C, Item 34 of
such Form N-2.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 3

    July 22, 2008

    4.

    Please revise the disclosure to include an undertaking that you will file a
post-effective amendment pursuant to Section 8(c) of the Securities Act in connection with
any offering of warrants.

    In response to this Comment, as discussed during the July 21 Teleconference, the Company
hereby undertakes to file a post-effective amendment pursuant to Section 8(c) of the
Securities Act prior to any offering by the Company of warrants instead of revising the
Undertakings section contained in Part C of the Registration Statement.

    In addition, to the extent the Company files another post-effective amendment for the
purpose of a material update to the Registration Statement or files a new registration
statement on Form N-2, the Company will include a similar undertaking in Part C, Item 34 of
such Form N-2.

*                    *                    *

We respectfully request that additional comments, if any, in connection with the subject filing be
directed to Clifford Chance US LLP, Attention: Leonard B. Mackey, Jr., Esq. or Andrew S. Epstein,
Esq., 31 West 52nd Street, New York, New York 10019, facsimile (212) 878-8375.

Very
truly yours,

/s/ Andrew
S. Epstein

Andrew S. Epstein

    cc:

    John F. Barry III

M. Grier Eliasek

Brian Oswald

Simon Marom, Esq.

Leonard B. Mackey, Jr., Esq.

CORRESP
1
filename1.htm

RESPONSE LETTER

July 2, 2008

VIA EDGAR AND BY COURIER

Mr. Larry Green

Division of Investment Management

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Mail Stop 0123

    Re:

    Prospect Capital Corporation

    Registration Statement on Form N-2

    Post-Effective Amendment No. 6

    Filed on May 28, 2008

    File Number 333-143819

Dear Mr. Green,

On behalf of our client, Prospect Capital Corporation (the “Company”), set forth below is the
response of the Company to the comments of the staff of the Division of Investment Management of
the Securities and Exchange Commission (the “Staff”), received by telephone on June 25, 2008 and
June 26, 2008, with respect to Post-Effective Amendment No. 6 to the Registration Statement (the
“Registration Statement”) on Form N-2 (Registration No. 333-143819) filed by the Company on May 28,
2008.

We have enclosed with this letter a marked copy of Post-Effective Amendment No. 8 to the
Registration Statement (“Amendment No. 8”), which was filed today by the Company via EDGAR,
reflecting all changes to the Registration Statement. Unless otherwise indicated, page references
in the description of the Staff’s comments refer to the Registration Statement, and page references
in the responses refer to Amendment No. 8.

General

    1.

    Please revise the disclosure to include a “statement of additional information” as
required by Part B of Form N-2 or, in the alternative, if you believe a statement of
additional information is not required to be included in the Registration Statement,
please revise the disclosure to include a discussion in Part A of the Registration
Statement indicating your reasoning.

    In response to this Comment, we respectfully advise the Staff that the Company did not
include a “statement of additional information” as required by Part B of Form N-2 because
all of the information required by Part B is already included in Part A of the Registration
Statement. In further response to this Comment, we respectfully advise the Staff that we
did not revise the disclosure to include a discussion in Part A of the Registration
Statement indicating our reason for not including a statement of additional information.
We respectfully refer the Staff to the instructions to Part B of Form N-2, which state that
a registrant need not prepare a statement of additional information or refer to it in the

    Mr. Larry Green

    Securities and Exchange Commission

    Page 2

    July 2, 2008

    prospectus if all of the information required to be in the statement of additional
information is included in the prospectus.

    2.

    Please confirm that you made this filing under Section 10(a)(3) of the Securities Act
of 1933, as amended (the “Securities Act”) and explain the purpose of this filing.

    In response to this Comment, we advise the Staff supplementally that this post-effective
amendment to the Registration Statement was filed under Section 10(a)(3) of the Securities
Act in order for the Company to include in the Registration Statement updated audited
financial statements through June 30, 2007, given that the Company’s fiscal year end is
June 30th, and the latest audited financial statements found in previous filings were as of
June 30, 2006, making them over 16 months old. We have also included financial statements
as of March 31, 2008, given that the information was publicly available.

Registration Statement Cover

    3.

    Please revise the disclosure to delete references to Section 8(a) of the Securities
Act and related language regarding delaying the effectiveness of the Registration
Statement, as Section 8(a) of the Securities Act conflicts with Section 8(c), the
applicable Securities Act section.

    In response to this Comment, we have revised the disclosure on the cover page of the
Registration Statement to delete references to Section 8(a) of the Securities Act and
related language regarding delaying the effectiveness of the Registration Statement.

Prospectus Summary, page 1

    4.

    We note your statement that you terminated your policy of investing at least 80% of
your net assets in energy companies. Please revise the disclosure to clarify that you
still focus your investments in the energy industry, but also invest in other areas.

    In response to this Comment, we respectfully refer the Staff to our disclosure under “Risk
Factors—Risks Related To Our Investments—We may not realize gains or income from our
investments” on page 17 where the Company explains that while it expects to be less focused
on the energy industry in the future, it will continue to have significant holdings in the
energy and energy related industries.

    In further response to this Comment, we have revised the disclosure under “Prospectus
Summary—The Company” on page 1 and
“Business—General” on page 45 to explain that while
the Company expects to be less focused on the energy industry in the future, it will
continue to have significant holdings in the energy and energy related industries.

    5.

    We note your statement that on May 28, 2008 you priced a public offering of 3.25
million shares of common stock, which is expected to close on or about June 2, 2008.
Please revise the disclosure to update this statement.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 3

    July 2, 2008

    In response to this Comment, we have revised the disclosure under “Prospectus
Summary—Recent Developments” on page 4, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Recent Developments” on
page 25, and “Notes to
Consolidated Financial Statements (Unaudited)—Note 10 (Subsequent Events)” on page F-30 to
update information to reflect the current status of the above-referenced public offering.

Risk Factors

We are a relatively new company with limited operating history, page 10

    6.

    We note your statement that the dividends that you pay prior to being fully invested
may be substantially lower than the dividends that you expect to pay when your portfolio
is fully invested. Please revise this disclosure to clarify what is meant by “fully
invested” and revise this language if you are not in fact 100% invested.

    In response to this Comment, we have revised the disclosure under “Risk Factors—Risks
Relating To Our Business And Structure—We are a relatively new company with limited
operating history” on page 11 and 12 to remove references to “fully invested” and to
disclose that as the Company continues to make new investments, future dividend levels will
be dependent on its ability to make such investments and to finance such investments.

Provisions of the Maryland General Corporation Law and our charter..., page 21

    7.

    We note your statement that the Maryland Business Combination Act and the Maryland
Control Share Acquisition Act may discourage others from trying to acquire control of you
and increase the difficulty of consummating any offer. Please revise the disclosure to
mention that these provisions may prevent your shareholders from being able to sell shares
of your common stock at a premium over the current or prevailing market prices.

    In response to this Comment, we have revised the disclosure under “Risk Factors—Risks
Related To Our Securities—Provisions of the Maryland General Corporation Law and of our
charter and bylaws could deter takeover attempts and have an adverse impact on the price of
our common stock” on page 23 to describe that these provisions may prevent the Company’s
shareholders from being able to sell shares of its common stock at a premium over the
current or prevailing market prices.

Use of Proceeds, page 39

    8.

    We note your statement that you intend to use the net proceeds from selling
securities for general corporate purposes, which may include investing in portfolio
companies in accordance with your investment objective and strategies, repayment of
indebtedness, investing in cash equivalents, U.S. government securities and other
high-quality debt investments that mature in one year or less from the date of investment.
Please revise the disclosure to clarify that the general corporate purposes may actually
not include investing in portfolio companies.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 4

    July 2, 2008

    In response to this Comment, we have revised the disclosure under “Use of Proceeds” on page
40 to clarify that the Company may use the net proceeds from selling securities for
investment in portfolio companies in accordance with the Company’s investment objective
and strategies, repayment of then outstanding indebtedness, acquisitions or general
corporate purposes.

Forward Looking Statements, page 40

    9.

    Please revise the disclosure to include language related to Section 27A of the
Securities Act, which is found under the section “Prospectus Summary” on page 1 of the
Registration Statement.

    In response to this Comment, we have revised the disclosure
under “Forward-Looking
Statements” on page 41 to disclose that the forward-looking statements do not meet the safe
harbor for forward-looking statements pursuant to Section 27A of the Securities Act.

Managerial Assistance, page 63

    10.

    We note your statement that as a business development company, you offer, and must
provide upon request, managerial assistance to certain of your portfolio companies.
Business development companies are required to provide this assistance to all of their
portfolio companies. Please revise the disclosure to delete the reference to “certain” if
you in fact provide this assistance to all of your portfolio companies.

    In response to this Comment, we respectfully advise the Staff that the disclosure includes
the word “certain” because pursuant to Section 2(a)(48)(B) of the Investment Company Act of
1940, as amended, a business development company is not required to offer or provide
managerial assistance to all of its portfolio companies.

Financial Statements

    11.

    Please confirm in your response that you will comply with existing guidelines for
investment companies regarding consolidated subsidiaries and financial statements.

    In response to this Comment, we advise the Staff supplementally that the Company will
comply with existing guidelines for investment companies regarding consolidated
subsidiaries and financial statements pursuant to Article 6 of Regulation S-X and the
American Institute of Certified Public Accountants Audit and Accounting Guide for
Investment Companies. In response to this Comment, we have revised the disclosure under
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Overview as of March 31, 2008—Significant Accounting Policies and Estimates”
on page 25 to include disclosure regarding these guidelines.

Part C—Other Information, page 7

    Mr. Larry Green

    Securities and Exchange Commission

    Page 5

    July 2, 2008

    12.

    Please revise the disclosure to include an undertaking that you will file a
post-effective amendment pursuant to Section 8(c) of the Securities Act in connection with
any offering of your securities below net asset value.

    In response to this Comment, we respectfully advise the Staff that we have not revised the
disclosure to include an undertaking that the Company will file a post-effective amendment
pursuant to Section 8(c) of the Securities Act in connection with any offering of its
securities below net asset value. The requested disclosure is not required under Form N-2
or any of the rules or statutes relating to Form N-2. In further response to this Comment,
the requested disclosure is not market standard. For example, we respectfully refer you to the registration statement
on Form N-2 filed by American Capital Strategies, Ltd. on May 28, 2008 and the
registration statement on Form N-2 filed by Ares Capital
Corporation on April 9, 2008. Therefore, imposing this limitation on
the Company would put the Company at a competitive disadvantage.

    13.

    Please revise the disclosure to include an undertaking that you will file a
post-effective amendment pursuant to Section 8(c) of the Securities Act in connection with
any offering of warrants or rights.

    In response to this Comment, we respectfully advise the Staff that we have not revised the
disclosure to include an undertaking that the Company will file a post-effective amendment
pursuant to Section 8(c) of the Securities Act in connection with any offering of warrants
or rights. We respectfully refer the Staff to our response to Comment 12. In further
response to this Comment, the Registration Statement does not provide for offerings of
rights, therefore, this portion of the requested disclosure does not apply to the
Registration Statement.

    Mr. Larry Green

    Securities and Exchange Commission

    Page 6

    July 2, 2008

     We respectfully request that additional comments, if any, in connection with the subject
filing be directed to Clifford Chance US LLP, Attention: Leonard B.
Mackey, Jr., Esq. or Andrew S. Epstein, Esq., 31 West
52nd Street, New York, New York 10019, facsimile (212) 878-8375.

Very truly yours,

/s/ Andrew
S. Epstein

Andrew S. Epstein

    cc:

    John F. Barry III

    M. Grier Eliasek

    Brian Oswald

    Simon Marom, Esq.

    Leonard B. Mackay, Jr., Esq.

CORRESP
1
filename1.htm

[LETTERHEAD OF CLIFFORD CHANCE US LLP]

September 6, 2007

VIA EDGAR

Securities and Exchange Commission

100 F Street, NE
Washington, D.C. 20549

Attention: Larry L. Greene

    Re:

    Prospect
      Capital Corporation

    Form N-2 filed June 18, 2007

    File Nos.
      814-00659 and 333-143819

Dear Mr. Greene:

     We
acknowledge your request to remove references to rights offerings from the above
referenced registration statement and will ensure that all such references are
removed from any supplements to this registration statement filed pursuant to
Rule 497.

Best Regards,

/s/ Leonard B. Mackey, Jr.

Leonard B. Mackey, Jr.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
INVESTMENT MANAGEMENT
Leonard B. Mackey, Jr., Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019-6131
Re: Prospect Capital Corporation (the "Fund")
File Numbers 814-00659 & 333-143819
Dear Mr. Mackey, Jr.:
On June 18, 2007, the Fund filed a registration statement on Form N-2 under the
Securties Act of 1933 ("Securities Act"). Your letter dated June 15,2007, accompanied
the filing. Your letter requests limited review in accordance with Securties Act Release
No. 6510 (Februar 15, 1984). With certain exceptions, we have limited our review of
the filing. The Fund is a business development company ("BDC") regulated under the
Investment Company Act of 1940 (" 1940 Act"). The filing was made to register the
offering, pursuant to Rule 415 under the Securties Act, of the Fund's common and
preferred stocks, debt securities and warants.
Our comments regarding the filing are set fort below.
General
1. Please state in your response letter whether the NASD wil or has reviewed the
proposed underwting terms and arangements of the transaction involved in the
registration statement. In view of the Fund's reliance on Rule 415, when wil this matter
be submitted to the NASD, e.g., will the NASD review each supplement?
2. Confirm that the disclosure in the filing meets the type size requirements of Rule
420 under Regulation C of the Securties Act.
3. On facing page of the filing the Fund checked the box related to the filing of a
pre-effective amendment and indicates that the filing is Pre-effective Amendment No.4.
Explain and correct this discrepancy.
4. Notwithstanding the Fund's name change in May ofthis year, the EDGAR system
curently designates the Fund as "Prospect Energy Corporation". Please take appropriate
action to update the Fund's records on EDGAR.
Loc: Computa-IPCC7052OO7RPFD
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5. The filing constitutes a unversal shelf registration statement registering an
indeterminate amount of common, preferred, debt and warants which wil in no event
exceed $500,000,000. Unless the filing contains all of the information to be disclosed in
subsequent supplements related to the offering of the Fund's.preferred, debt and warants,
the Fund should fie draft supplements reflecting the form of filings expected to be made
in connection with futue take downs.
6. Please see the U.S. Securties and Exchange Commission, A Plain English
Handbook, (1998). Please review and revise the disclosure where it appears necessar so
as to assure conformity with the Commission's plain English requirements. For example,
briefly explain the underlined terms.in the following sentence: "Our Securities may be
offered directly to one or more purchasers, including existing stockholders in a rights
offering, to new stockholders, via an optional cash purchase or designated offeree
program, or through agents designated from time to time by us, or to or though
underwters or dealers."
7. We remind the Fund of its obligation to fie electronic reports with respect to its
fidelity bond coverage under Rule 17g-1(g) under the 1940 Act.
Prosvectus Cover
8. Add the disclosure required by Rule 481(d) under the Securities Act regarding
over-allotments.
9. Disclosure in the first paragraph states that the Fund may offer: "up to
$500,000,000 of our common stock, preferred stock, debt securties or warants
representing rights to purchase shares of our common stock, preferred stock or debt
securties. . ." The second paragraph discloses that securties: "may be offered directly
to one or more purchasers, including existing stockholders in a rights offering, . . ." If, in
addition to warants, the Fund also expects to offer separately rights, revise the document
appropriately to disclose and register the offerig of rights.
1 O. Revise the second paragraph to add the following underlined clause: "We may not
sell any of our Securties though agents, underwters or dealers without delivery of the
prospectus and a prospectus supplement describing the method and terms of the offering
of such Securties."
11. The third paragraph describes the Fund as a "financial services company." Why.
not refer to the Fund as a business development company?
Prosvectus
12. A paragraph of disclosure appearng in bold text on page three begins with the
following sentence: "The registration statement contains additional information about us
and the Securties being registered by this prospectus." Do not format ths disclosure in
bold.
Loc: Compula-IPCC7052OO7RPFD
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13; With respect to the following statement required by Rule 481 (b), confirm that the
disclosure wil appear on the outside front cover page, and do not bold this disclosure:
"Neither the SEC nor any state securities commssion has approved or disapproved of
these securties or determined if ths prospectus is trthful or complete. Any
representation to the contrar is a criminal offense."
14. Disclosure captioned "About This Prospectus" indicates that the registration
statement constitutes a "shelf' filing. Revise the disclosure to indicate whether ths
offering wil be conducted on a continuous or delayed basis.
15. Revise the discussion captioned "Prospectus Sumar to clarfy that any
forward-looking statements contaied in the prospectus do not meet the safe harbor for
forward-looking statements pursuant to Section 27 A of the Securities Act.
16. Disclosure sub-captioned "Prospectus Sunar - Use of proceeds" states that
uness stated otherwise in a supplement the Fund wil use the net offering proceeds to,
among others, repay debt. The use of proceeds to payoff debt should be disclosed
prominently because, in effect, investors are purchasing liabilties. Revise this disclosure
accordingly.
17. Disclosure sub-captioned "Prospectus Sumar - Distrbutions" states that the
Fund has paid: "quarerly dividends to the holders of our common stock and generally
intend to continue to do so." Use another term because the underlined term is misleading
if it includes retus of capital. For example, use the term "distrbutions." Other
disclosure under this caption indicates that: "Certain amounts of the quarterly dividends
may from time to time be paid out of our capital rather than from eargs for the quarer
as a result of our deliberate planng or by accounting reclassifications." At an
appropriate location disclose the signficance of return of capital distrbutions to a
shareholder, including any affect on a shareholder's basis in the Fund. Advise the staff
how you wil notify shareholders about the character of the distrbutions.
18. Disclosure sub-captioned "Prospectus Sumar - Risk factors" indicates that an
investment in the Fund involves certain risks relating to the Fund's strcture and
investment objectives that should be considered by investors. Other than statements
similar to the above, we can find no discussion of the Fund's objective and strategies in
the prospectus. Accordingly, add the disclosure required by Items 1(b) and 8.2 of Form
N-2.
19. Revise the disclosure under ths sub-caption (or a later discussion sub-captioned:
"The energy industr is subject to many risks") to indicate the percentage ofthe Fund's
assets invested in the energy industr.
20. To the extent appropriate, revise the fee table consistent with the following:
Loc: Compula-IPCC7052OO7RPFD
71212007-3:11:11 PM

· Combine the management fee and incentive fee line items appearing under the
anual expenses segment of the table,
· In light of the Fund's investments in other investment companes (See the caption
"Regulation"), add an additional line item for Acquired Fund Fees and
Expenses (See Investment Company Act Release No. 27399 (June 20,2006)),
· Move the footnotes appearng after "Total anual expenses (estimated)" to follow
the Example,
· Delete the word "(estimated)" from the above referenced line item,
· With respect to. footnote 5, explain whether $50 millon cònstitutes the projected
borrowings over the next year,
· Explain the legal basis and the meanng of the iiderlined disclosure in footnote 6
which states: "We expect to invest all of the net proceeds from securities
registered under the registration statement of which this prospectus is a par
withn thee years or less of the date of the initial registration. . .,"
· In addition, conform the disclosure referenced imediately above with earlier
disclosure under the sub-caption "Prospectus Sumar - Use of Proceeds," to the
effect that proceeds may be use to repay debt,
· Explain the consequences of the situation referenced in footnote 6, namely: "The
income incentive fee wil be computed and paid on income that may include
interest that is accrued but not yet received in cash," where payment is never
received.
21. With respect to the fee table, confi that the Fund does not have any debt or
preferred expenses required to be disclosed in the table.
22. Expand the disclosure sub-caption "Risk Factors - We are a relatively new
company with limited operating history" to indicate when the Fund became a BDC.
23. Disclosure sub-caption "Risk Factors - Regulations governng our operation. . ."
states: "In addition, we may in the future seek to securtize our loans to generate cash for
funding new investments. To securtize loans, we may create a wholly owned subsidiary
and contrbute a pool of loans to such subsidiar. Ths could include the sale of interests
in the subsidiar on a non-recourse basis. . ." Add disclosure regarding any risk or
liabilty to the Fund or its shareholders stemming from the use of these entities.
Advise the staff how the Fund proposes to securtize its loans and whether the
proposal is (i) consistent with the puroses of a BDC, (ii) requires exemptive relief under
§57, and (iii) comports with the capital strctue requirements under §§18 and 61. We
may have further comment.
Lo: Compuia-IPCC7052OO7RFD.
71212007-3:11:11 PM

24. The discussion captioned "Board approval of the Investment Advisory
Agreement" contains disclosure regarding the approval of the advisory agreement.
Revise ths discussion by adding a discussion of the material factors and conclusions that
formed the basis for the Board's approval of the advisory agreements. See Item 18.13 of
Form N-2.
25. The discussion sub-captioned "Provisions of The Marland General Corporation
Law and Our Charer and Bylaws," as well as several subsequent segments, discuss
matters that restrict the effectiveness of actions to take control of the Fund. The
discussion should be formatted so as to clearly draw attention to those provisions the
effect of which is to impede others in gaining control of the Fund. In addition, revise the
disclosure to indicate that anti-takeover provisions could have the effect of depriving
shareholders of an opportty to sell their shares at a premium over prevailing market
prices by discouraging a third pary from seeking to obtain control of the Fund.
26. Disclosure in the fift paragraph of the discussion captioned "Plan of
Distrbution" describes the conditions applicable to the sales of Fund securties at below
curent net asset value. Omitted from the disclosure is any reference to the shareholder
approval required in §63(2)(A) of the 1940 Act. Add appropriate disclosure.
Part C
27. Disclosure in Item 25.2 of Form N-2 indicates that Exhbit I (Opinon and
Consent of Clifford Chance US LLP) wil be fied by amendment. Explain to the staff
whether the Fund wil file post-effective amendments in order to sell securities off the
shelf or whether it proposes to file supplements under Rule 497. If the latter, advise the
staffhow the legal opinon wil be updated.
28. Exhibit k-4, is a Credit Agreement between the Fund, its domestic subsidiaries,
certain lenders and Ban of Montreal. Disclosure in the fiing indicates that the
agreement wil be submitted along with a subsequent amendment. Confirm that ths
agreement establishes the credit facility referred to in the text as the agreement under
which the Fund curently has $50 milion available to it. Confirm also that the agreement
does not authorize or permit any lender or other third party thereunder to alter or change
investment policies or strategies of the Fund.
Accountine: Comment
29. The Balance Sheet, Statements of Operations, Statements of Changes in Net
Assets and Statements of Cash Flows contain a footnote that states: "Certain amounts
have been reclassified to conform to the curent period's presentation." Please disclose
what amounts have been reclassified and why.
*** * * * * * * * *
Lo: Computa-IPCC7052OO7RPFD
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We note that portions of the filing are incomplete. We may have additional
comments on such portions when you complete them in a pre-effective amendment, on
disclosures made in response to this letter, on information supplied in your response
letter, or on exhibits added in any pre-effective amendments.
Whenever a comment is made in one location, it is considered applicable to all
similar disclosure appearng elsewhere in the registration statement.
Response to this letter should be in the form of a pre-effective amendment filed
pursuant to Rule 472 under the Securities Act. Where no change wil be made in the
fiing in response to a comment, please indicate this fact in your response letter and
briefly state the basis for your position. Where changes are made in response to our
comments provide information regarding the nature of the change and, if appropriate, the
location of such new or revised disclosure in the amended filing. As required by the rule,
please insure that you mark new or revised disclosure to indicate change. .
Please advise us if you have submitted or expect to submit an exemptive
appIlcation or no-action request in connection with your registration statement.
You should review and comply with all applicable requirements of the federal
securties laws in connection with the preparation and distrbution of a preliminar
prospectus.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filings reviewed by the staff to be certain that they have provided all
information investors require for an informed decision. Since the Fund and its
management are in possession of all facts relating to the Fund's disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In the event the Ftid requests acceleration ofthe effective date of the pending
registration statement, it should furnsh a letter, at the time of such request,
acknowledging that
. the Fund is responsible for the adequacy and accuracy of the disclosure in
the fiing;
. should the Commission or the staff, acting pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from
takg any action with respect to the filing;
. the action of the Commssion or the staff, acting pursuant to delegated
authority, in declaring the fiing effective, does not relieve the Fund from
its full responsibilty for the adequacy and accuracy ofthe disclosure inthe filing; and .
. the Fund may not assert ths action as a defense in any proceeding initiated
by the Commission or any person under the federal securties laws of the
United States.
Loc: Compula-IPCC7052007RPFD
71212007-3:11:11 PM

In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Investment Management in
connection with our review of your filing or in response to our comments on your filing.
We wil consider a written request for acceleration of the effective date of the
registration statement as confirmation of the fact that those requesting acceleration are
aware of their respective responsibilties.
Should you have any questions regarding this letter, please contact me at (202)551-6976. .
Sincerely,~~Larr L. Gree e
Senior Counsel
Monday, July 23, 2007
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<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

							April 28, 2006

Carla Vogel, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, NY  10019-6131

	Re:	Prospect Energy Corporation
		File Nos. 333-132575 and 814-659

Dear Ms. Vogel:

	We have reviewed the registration statement on Form N-2 for
Prospect Energy Corporation ("Fund") filed with the Commission on
March 20, 2006.  We have the following comments.

Prospectus

Cover

	Please clearly distinguish the Fund, its shareholders and
Investment Adviser throughout the document.

	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.

	Please include the pricing table required by Item 1.g. of
Form
N-2

      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.

      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.

      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.

Summary

	Please summarize the risks of investing in the energy sector.

	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.

Fees and Expenses

	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.

	Please delete from the first sentence of footnote 8 the term
"future annual expenses" and insert in its place "expenses during
current fiscal year."

	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.

      Please remove the footnotes from between the Fee Table and
Example and insert them immediately after the Example.

      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.

      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.

      Please note that the staff anticipates providing additional
comments pertaining to the Fund`s financial statements under
separate
cover.

Risk Factors

Regulations governing our operation as a business development
company
affect our ability to raise, and the way in which we raise,
additional capital

	Disclosure in this section indicates the Fund may securitize
loans, contribute them to a subsidiary, sell interests in the
subsidiary and use the cash to fund new investments.  Will the
Fund
include money obtained in this fashion when determining the degree
to
which the Fund is leveraged?

Potential conflicts of interest could impact our investment
returns

	The first paragraph states that the Fund`s executive officers
and directors and management of the Investment Adviser may have
obligations to investors in other entities, including related
entities, the fulfillment of which might not be in the best
interests
of the Fund`s stockholders.  Please disclose how the conflict of
interest will affect the Fund`s performance and how any such
conflicts will be resolved.

      The last sentence of the fourth paragraph states that, to
the
extent the Adviser can influence the portfolio companies, the
incentive fee may provide the Adviser with an incentive to induce
portfolio companies to accelerate or defer interest or other
obligations owed to the Fund from one calendar quarter to another.
Please explain to us what measures the Board will adopt to protect
shareholders against this type of overreaching by the Adviser.

Use of Proceeds

	Please state the amount of time in which the proceeds of this
offering will be invested in portfolio companies consistently
throughout the registration statement.  Please explain why the
Fund
will require two or three years to invest the proceeds of this
offering.  See Guide 1 to Form N-2.

Results of Operations

	Please clarify the meaning of the word "closed" as used in
the
sentence discussing long-term portfolio investments.

Forward-Looking Statements

      This section attempts to limit liability for forward-looking
statements.  Please delete this section.  Statements relating to
investment companies (including business development companies)
and
statements made in connection with initial public offerings are
excluded from the safe harbor for forward-looking statements.  See
Section 21E(b)(2)(B) & (D) of the Securities Exchange Act of 1934.

Control Persons and Principal Stockholders

	Why is William Vastardis classified in this section as an
"Executive Director" of Prospect Energy Corp, rather than an
Interested Director?

Managerial Assistance to Portfolio Companies

      This paragraph states that the Fund or another person or
entity
will provide managerial assistance on behalf of the Fund to
portfolio
companies that request assistance.  Please disclose the identities
of
all potential providers of managerial assistance to portfolio
companies.  Please supplementally inform us whether the Fund or
portfolio companies will pay the Investment Adviser or any other
entity for managerial
assistance provided to portfolio companies.  Disclose who at the
Fund
is qualified to render the assistance.  Also advise us
supplementally
of the legal basis for receiving such compensation, including
citation to legislative history.

Management Fee

      How will average value of gross assets be "appropriately
adjusted" for share issuances or repurchases?  What does this
mean?

      Please disclose whether the Adviser is required to reimburse
the Fund for fees that were based on income accrued on deferred
interest obligations where the obligor subsequently defaults.

Dividend Reinvestment Plan

      The third paragraph states that the dividend reinvestment
plan
will use primarily newly issued shares to implement the plan and
that
these shares will be issued at the market price per share.
Section
23(b) of the Investment Company Act provides that closed-end funds
may not issue shares below net asset value.  Please explain to us
how
the Fund will issue shares to stockholders if the market price is
below the Fund`s net asset value.  See Section 23(b) of the
Investment Company Act.

Control Share Acquisitions

      The first sentence of the fourth paragraph states that, if
the
voting rights are not approved or the acquiring person does not
deliver an acquiring person statement, then the corporation may
repurchase for fair value any or all of the control shares, except
those for which voting rights have been previously approved.
Please
explain how this provision is consistent with Section 23(c) of the
Investment Company Act.

Undertakings

      Please undertake to file, in advance of any offering of the
subject securities, a post-effective amendment to the registration
statement disclosing the material terms of the securities.  Please
advise the staff how the Fund will file the legal opinions and
other
exhibits required for each take-down of the shelf registration.

General

	We note that portions of the filing are incomplete. We may
have
additional comments on such portions when you complete them in a
pre-
effective amendment, on disclosures made in response to this
letter,
on information supplied supplementally, or on exhibits added in
any
pre-effective amendments.  Please note that comments we give in
one
section apply to other sections in the filing that contain the
same
or similar disclosure.
      Please advise us if you have submitted or expect to submit
an
exemptive application or no-action request in connection with your
registration statement.
      Response to this letter should be in the form of a pre-
effective amendment filed pursuant to Rule 472 under the
Securities
Act. Where no change will be made in the filing in response to a
comment, please indicate this fact in a supplemental letter and
briefly state the basis for your position.
      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the Fund and its management are in
possession of all facts relating to the Fund`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
	Notwithstanding our comments, in the event the Fund requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the Fund from its full responsibility for the adequacy and
accuracy of the disclosure in the filing; and
* the Fund may not assert this action as defense in any proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.

*    *    *    *    *    *

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Investment Management in connection with our review of
your filing or in response to our comments on your filing.
	Any questions you may have regarding the filing or this
letter
may be directed to me at 202.551.6965.

							Sincerely,

							Vincent J. Di Stefano
							Senior Counsel
6

</TEXT>
</DOCUMENT>

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
<PAGE>
                          [Clifford Chance Letterhead]

July 31, 2006

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

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

Dear Mr. Pfordte:

         Thank you for your telephonic comment on July 31, 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 comment, as requested.

         The Fund has considered the Staff's comment and has authorized us to
make on its behalf the response and change discussed below to the Registration
Statement. This change will be reflected in pre-effective amendment No. 2 to the
Registration Statement, which will be filed via EDGAR shortly after we have
confirmed with you that the responses below are acceptable.

COMMENT:    PLEASE INDICATE THAT THE FUND WILL FILE OPINIONS IN CONNECTION WITH
ISSUANCE OF SECURITIES OTHER THAN SHARES OF COMMON STOCK.

                  Response: We have added subsection (f) to Item 34 --
                            Undertakings in Part C to the Registration Statement
                            as attached.

         If you would like to discuss any of these responses in further detail
or if you have any questions, please feel free to contact me at (212) 878-8489.
Thank you.

Best regards,

/s/ Leonard B. Mackey

Leonard B. Mackey

Attachments

<PAGE>

ITEM 34. UNDERTAKINGS

         1. The Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective date of its
registration statement, the net asset value declines more than ten percent from
its net asset value as of the effective date of the registration statement; or
(2) the net asset value increases to an amount greater than the net proceeds as
stated in the prospectus.

         2. Any securities not taken in a rights offering by shareholders are to
be reoffered to the public, an undertaking to supplement the prospectus, after
the expiration of the subscription period, to set forth the results of the
subscription offer, the transactions by underwriters during the subscription
period, the amount of unsubscribed securities to be purchased by underwriters,
and the terms of any subsequent reoffering thereof. If any public offering by
the underwriters of the securities being registered is to be made on terms
differing from those set forth on the cover page of the prospectus, we will file
a post-effective amendment to set forth the terms of such offering.

         3. The Registrant undertakes that:

                  (a) to file, during any period in which offers or sales are
         being made, a post-effective amendment to the registration statement:

                           (1) to include any prospectus required by Section
                  10(a)(3) of the 1933 Act;

                           (2) to reflect in the prospectus any facts or events
                  after the effective date of the registration statement (or the
                  most recent post-effective amendment thereof) which,
                  individually or in the aggregate, represent a fundamental
                  change in the information set forth in the registration
                  statement; and

                           (3) to include any material information with respect
                  to the plan of distribution not previously disclosed in the
                  registration statement or any material change to such
                  information in the registration statement.

                  (b) that, for the purpose of determining any liability under
         the 1933 Act, each such post-effective amendment shall be deemed to be
         a new registration statement relating to the securities offered
         therein, and the offering of those securities at that time shall be
         deemed to be the initial bona fide offering thereof;

                  (c) to remove from registration by means of a post-effective
         amendment any of the securities being registered which remain unsold at
         the termination of the offering;

                  (d) that, for the purpose of determining liability under the
         1933 Act to any purchaser, each prospectus filed pursuant to Rule
         497(b), (c), (d) or (e) under the 1933 Act as part of a registration
         statement relating to an offering, other than prospectuses filed in
         reliance on Rule 430A under the 1933 Act, shall be deemed to be part of
         and included in the registration statement as of the date it is first
         used after effectiveness. Provided, however, that no statement made in
         a registration statement or prospectus that is part of the registration
         statement or made in a document incorporated or deemed incorporated by
         reference into the registration statement or prospectus that is part of
         the registration statement will, as to a purchaser with a time of
         contract of sale prior to such first use, supersede or

                                      C-6
<PAGE>

         modify any statement that was made in the registration statement or
         prospectus that was part of the registration statement or made in any
         such document immediately prior to such date of first use; and

                  (e) that, for the purpose of determining liability of the
         Registrant under the 1933 Act to any purchaser in the initial
         distribution of securities: The undersigned Registrant undertakes that
         in a primary offering of securities of the undersigned Registrant
         pursuant to this registration statement, regardless of the underwriting
         method used to sell the securities to the purchaser, if the securities
         are offered or sold to such purchaser by means of any of the following
         communications, the undersigned Registrant will be a seller to the
         purchaser and will be considered to offer or sell such securities to
         the purchaser: (1) any preliminary prospectus or prospectus of the
         undersigned Registrant relating to the offering required to be filed
         pursuant to Rule 497 under the 1933 Act; (2) the portion of any
         advertisement pursuant to Rule 482 under the 1933 Act relating to the
         offering containing material information about the undersigned
         Registrant or its securities provided by or on behalf of the
         undersigned Registrant; and (3) any other communication that is an
         offer in the offering made by the undersigned Registrant to the
         purchaser.

                  (f) if the Registrant intends to issue securities other than
         its shares of common stock, at or before the time the Registrant files
         a prospectus supplement regarding the offering of such securities
         pursuant to Rule 497 under the Securities Act of 1933, it will file a
         post-effective amendment with an opinion regarding the validity of such
         securities included as an exhibit.

                                      C-7

</TEXT>
</DOCUMENT>

CORRESP
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filename1.htm

                            [Clifford Chance Letterhead]

July 18, 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 telephonic comments on July 13, 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 will be reflected in pre-effective amendment No. 2 to
the Registration Statement, which will be filed via EDGAR shortly after we have
confirmed with you that the responses below are acceptable.

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

COMMENT 1. PLEASE REVISE THE DISCLOSURE TO INCLUDE THE MATERIAL TERMS OF THE
           SUBJECT SECURITIES SUCH AS PREFERRED STOCK, WARRANTS OR DEBT
           SECURITIES.

               Response 1. Language has been added accordingly, as reflected in
               the attached pages 76 to 85.

COMMENT 2. PLEASE REMOVE THE FOOTNOTES FROM BETWEEN THE FEE TABLE AND EXAMPLE
           AND INSERT THEM IMMEDIATELY AFTER THE EXAMPLE.

               Response 2. We have moved the footnotes to immediately after the
               Example, as reflected in the attached pages 7 to 10.

COMMENT 3. THE FIRST PARAGRAPH OF "RISK FACTORS-POTENTIAL CONFLICTS OF INTEREST
           COULD IMPACT OUR INVESTMENT RETURNS" STATES THAT THE FUND'S EXECUTIVE
           OFFICERS AND DIRECTORS AND MANAGEMENT OF THE INVESTMENT ADVISER MAY
           HAVE OBLIGATIONS TO INVESTORS IN OTHER ENTITIES. PLEASE DISCLOSE THE
           POTENTIAL CONFLICT OF INTEREST ISSUES (GIVE EXAMPLES) AND WHAT
           PROCEDURE THE COMPANY WILL TAKE TO RESOLVE THEM.

               Response 3. We have revised this risk factor to address this
               comment, as reflected on the attached page 18.

COMMENT 4. PLEASE FILE COUNSEL OPINION.

               Response 4. We will file our opinion with pre-effective amendment
               No. 2 to the Registration Statement.

COMMENT 5. ON PAGE 6 OF THE "FEES AND EXPENSES" SECTION, PLEASE ADD "AND USED
           THE CONTRACTUAL FEE DUE TO THE INVESTMENT ADVISER." AT THE END OF THE
           EXISTING SENTENCE "THE TABLE IS BASED ON OUR NET ASSETS OF MARCH 31,
           2006 AND ASSUMES THAT WE HAVE BORROWED ALL $30 MILLION AVAILABLE
           UNDER OUR LINE OF CREDIT ON THAT DATE."

               Response 5. The language has been revised accordingly, as
               reflected on the attached page 7.

COMMENT 6. FOOTNOTE (6) ON PAGE 7 SAYS "IN THE CHART ABOVE, WE HAVE ASSUMED A
           PRE-INCENTIVE FEE NET INVESTMENT OF INCOME OF 10.20% AS A PERCENTAGE
           OF NET ASSETS." WHERE DOES THE 10.20% COME FROM?

               Response 6. 10.20% is based on the actual amount of the incentive
               fee paid by the Fund for the quarter ended March 31, 2006.

COMMENT 7. IN THE "EXAMPLE" OF EXPENSES TABLE FOR 1, 3, 5, AND 10 YEARS, THE
           NUMBERS SEEM LOW. PLEASE REVISE TO TAKE INTO ACCOUNT THE TRANSACTION
           EXPENSES.

               Response 7. The expense figures have been revised accordingly.

     If you would like to discuss any of these responses in further detail or if
you have any questions, please feel free to contact me at (212) 878-8489. Thank
you.

Best Regards,

/s/ Leonard B. Mackey

Leonard B. Mackey

Attachments

                                        2

Fees and Expenses

The following table is intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly.  We caution you that some of the percentages indicated in the table below are estimates and may vary.  The table is based on our net assets at March 31, 2006 and assumes that we have borrowed all $30 million available under our line of credit on that date and used the contractual fee due to the Investment Adviser.  Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by "you," "us" or "Prospect Energy," or that "we" will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Prospect Energy.

Stockholder transaction expenses:

Sales load (as a percentage of offering price)(1)

 5.50%

Offering expenses borne by us (as a percentage of offering price)(2)

 1.32%

Dividend reinvestment plan expenses (3)

 None

Total stockholder transaction expenses (as a percentage of offering price)(4)

 6.82%

Annual expenses (as a percentage of net assets attributable to common stock)*:

Base management fee

 2.60%(5)

Incentive fees payable under Investment Advisory Agreement (20% of realized capital gains and 20% of pre-incentive fee net investment income)

 2.04%(6)

Interest payments on borrowed funds

 2.58%(7)

Other expenses

 1.96%(8)

Total annual expenses (estimated)

 9.18%(6)(8)(9)

Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock.  In calculating the following expense amounts, we have assumed we would have no leverage and that our annual operating expenses would remain at the levels set forth in the table above.

  1 year

 3 years

 5 years

 10 years

You would pay the following expenses on a $1,000 investment, assuming

a 5% annual return

 $162

 $338

 $499

 $843

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.  The income incentive fee under the Investment Advisory Agreement would be zero at the 5% annual return assumption, as required by the SEC for this table, since no incentive fee is paid until the annual return exceeds 7%; however, the income incentive fee currently being earned is nevertheless used to aggregate total expenses in the example as if the annual return were at the level recently achieved, which is higher than 5%, in accordance with SEC requirements.  Accordingly, the resulting calculations overstate expenses at the 5% annual return as these calculations do not reflect the provisions of the Investment Advisory Agreement as it would actually be applied in the case of a 5% annual return.  This illustration assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation in any of the indicated time periods.  If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors after such expenses, would be higher.  In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the dividend.  See "Dividend reinvestment plan" for additional information regarding our dividend reinvestment plan.

7

This example and the expenses in the table above should not be considered a representation of our future expenses.  Actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.

*                Net assets attributable to our common stock equal net assets (i.e., total assets less liabilities other than liabilities for money borrowed for investment purposes) at March 31, 2006.

(1)              In the event that the Securities to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.

(2)              The related prospectus supplement will disclose the estimated amount of offering expenses, the offering price and the offering expenses borne by us as a percentage of the offering price.

(3)              The expenses of the dividend reinvestment plan are included in "other expenses."

(4)              The related prospectus supplement will disclose the offering price and the total stockholder transaction expenses as a percentage of the offering price.

(5)              Our base management fee is 2.00% of our gross assets (which include any amount borrowed, i.e., total assets without deduction for any liabilities).  Assuming that we have borrowed $30 million, the 2.00% management fee of gross assets equals 2.60% of net assets.  See "Management—Investment Advisory Agreement" and footnote 6 below.

(6)              We expect to invest all of the net proceeds from securities registered under the registration statement of which this prospectus is a part within three years or less of the date of the initial registration and may have capital gains and interest income that could result in the payment of an incentive fee to our Investment Adviser in the first year after completion of this offering. However, the incentive fee payable to our investment adviser is based on our performance and will not be paid unless we achieve certain goals. In the chart above, we have assumed aour pre-incentive fee net investment income ofis an amount equal to 10.20% as a percentage of our net assets.  The incentive fee consists of two parts.  The first part, the income incentive fee, which is payable quarterly in arrears, will equal 20% of the excess, if any, of our pre-incentive fee net investment income that exceeds a 1.75% quarterly (7% annualized) hurdle rate, subject to a "catch up" provision measured as of the end of each calendar quarter.  In April 2006, we paid an incentive fee of $531,489 (see calculation below).  We expect the incentive fees we pay to increase to the extent we earn greater interest and dividend income through our investments in portfolio companies and, to a lesser extent, realize capital gains upon the sale of warrants or other equity investments in our portfolio companies.  Our Investment Adviser has voluntarily agreed that, for each fiscal quarter after January 1, 2005, the quarterly hurdle rate will be equal to the greater of (a) 1.75% and (b) a percentage equal to (i) the sum of the daily average of the "quoted treasury rate" for each month in the immediately preceding two quarters plus (ii) 0.50%.  Our Investment Adviser may terminate this voluntary agreement at any time upon 90 days' prior notice.  The "catch-up" provision requires us to pay 100% of our pre-incentive fee net investment income with respect to that portion of such income, if any, that exceeds the hurdle rate but is less than 125% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming an annualized hurdle rate of 7%).  The catch-up provision is meant to provide our Investment Adviser with 20% of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 125% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming an annualized hurdle rate of 7%).  The income incentive fee will be computed and paid on income that may include interest that is accrued but not yet received in cash.  Our pre-incentive fee net investment income used to calculate the income incentive fee is also included in the amount of our gross assets used to calculate the 2% base management fee (see footnote 5 above).  The second part of the incentive fee, the capital gains incentive fee, will equal 20% of our realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation.

Examples of how the incentive fee is calculated are as follows:

Assuming pre-incentive fee net investment income of 0.55%, there would be no income incentive fee because such income would not exceed the hurdle rate of 1.75%.

Assuming pre-incentive fee net investment income of 2.00%, the income incentive fee would be as follows:

= 100% × (2.00%—1.75%)

= 0.25%

Assuming pre-incentive fee net investment income of 2.30%, the income incentive fee would be as follows:

= (100% × ("catch-up": 2.1875%—1.75%)) + (20% × (2.30%—2.1875%))

= (100% × 0.4375%) + (20% × 0.1125%)

= 0.4375% + 0.0225%

= 0.46%

8

Assuming net realized capital gains of 6% and realized capital losses and unrealized capital depreciation of 1%, the capital gains incentive fee would be as follows:

= 20% × (6% – 1%)

= 20% × 5%

= 1%

The following is a calculation of the most recently paid Incentive fee of $531,489 in April 2006:

Prior Quarter Net Asset Value

 $105,363,891

Quarterly Hurdle Rate

 1.7500%**

Current Quarter Hurdle

 $1,843,868

125% of the Quarterly Hurdle Rate

 2.1875%

125% of the Current Quarter Hurdle

 $2,304,835

Current Quarter Pre Incentive Fee Net Investment Income

 $2,657,446

Incentive Fee – "Catch-Up"

 $460,967

Incentive Fee – 20% in excess of 125% of the Current Quarter Hurdle

 $70,522

Total Current Quarter Incentive Fee

 $531,489

** Please note that the quoted treasury rate plus 0.50% was 1.5575%, therefore the quarterly hurdle rate of 1.75% was used.

For a more detailed discussion of the calculation of the two-part incentive fee, see "Management—Investment Advisory Agreement."

(7)              Although we may incur indebtedness before the proceeds of an offering are substantially invested, we have not yet decided to what extent we will finance investments using debt.  We currently have $30 million available to us under a credit facility.  For more information, see "Risk Factors—Changes in interest rates may affect our cost of capital and net investment income" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources, Capital Raising Activities."  The table above assumes that we have borrowed all $30 million available under our line of credit.  The table below shows our estimated annual expenses as a percentage of net assets attributable to common stock, assuming that we did not incur any indebtedness.

Base management fee

 2.03%

Incentive fees payable under Investment Advisory Agreement (20% of realized capital gains and 20% of

pre-incentive fee net investment income)

 2.04%

Interest payments on borrowed funds

 None

Other expenses

 1.96%

Total annual expenses (estimated)

 6.03%

(8)              "Other expenses" is based on an estimate of expenses during the current fiscal year representing all of our estimated recurring operating expenses (except fees and expenses reported in other items of this table) that are deducted from our operating income and reflected as expenses in our Statement of Operations.  The estimate of our overhead expenses, including payments under the administration agreement based on our projected allocable portion of overhead and other expenses incurred by Prospect Administration in performing its obligations under the administration agreement.  "Other expenses" does not include non-recurring expenses.  See "Management—Administration Agreement."

(9)              Total annual expenses as a percentage of net assets attributable to our common stock are higher than the total annual expenses percentage would be for a

CORRESP
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filename1.htm

                          [Clifford Chance Letterhead]

June 28, 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 pre-effective amendment No. 1 to
the Registration Statement, which will be filed via EDGAR on or about June 28,
2006.

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

                                       2

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 revised to be consistent
                    with the Fund's management agreement.

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 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.

                                       3

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.

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:

                                       4

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%.

                    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.

                                       5

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 footnote (7) as been revised to
                    assume that the Fund did not incur indebtedness, therefore
                    it shows interest expenses of "none."

COMMENTS 15H. REGARDING APPENDIX F-7 (STATEMENT OF OPERATIONS) THE LINE ITEM FOR
              "NET UNREALIZED APPRECIATION (DEPRECIATION) FOR THE 3 MONTHS EN

CORRESP
1
filename1.htm

                          [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