8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.

Date of Report: December 11, 2007 (Date of earliest event reported)
Prospect Capital Corporation (Exact name of registrant as specified in its charter)
MD (State or other jurisdiction of incorporation)	333-114552 (Commission File Number)	43-2048643 (IRS Employer Identification Number)
10 East 40th Street, 44th Floor, New York, New York 10016 (Address of principal executive offices)		10016 (Zip Code)
212 448-0702 (Registrant's telephone number, including area code)
Not Applicable (Former Name or Former Address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events

Prospect Capital Makes $15 Million Second Lien Investment in Deb Shops

Item 9.01. Financial Statements and Exhibits

(a) Financial statements:
            None
(b) Pro forma financial information:
            None
(c) Shell company transactions:
            None
(d) Exhibits
            99.1       Press Release of Prospect Capital Corporation dated December 11, 2007

SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: December 11, 2007
PROSPECT CAPITAL CORPORATION By:  /s/ John F. Barry III                    
     John F. Barry III
     Chief Executive Officer

Exhibit Index
Exhibit No.	Description
99.1	Press Release of Prospect Capital Corporation dated December 11, 2007

EX-99 2 prospectcapitalcorp.htm PROSPECT CAPITAL CORPORATION PRESS RELEASE Prospect Capital Makes $15 Million Second Lien Investment in Deb Shops

NEW YORK, NY -- 12/11/2007 -- Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that it has made a second lien secured debt investment of $15 million in Deb Shops, Inc. ("DEB"), a leading specialty apparel retailer based in Philadelphia, Pennsylvania.

Founded in 1932, DEB offers value-oriented apparel to junior and junior plus-size female consumers, targeting the ages of 10 through 25, a rapidly growing demographic. DEB is the only national retailer to offer both junior regular and plus-sized apparel in a unified store format. DEB has approximately 337 stores in regional malls and strip shopping centers in 42 states, with a concentration in the Midwest and Northeast.

Prospect's second lien secured debt, along with other financing, supports the acquisition of DEB by an affiliate of Lee Equity Partners ("Lee Equity"), a New York-based private equity firm founded by Thomas H. Lee.

Allen Questrom, a Senior Advisor to Lee Equity, and former Chief Executive Officer of JC Penney, Federated Department Stores, Neiman Marcus, and Barneys New York, has joined DEB as its new non-executive Chairman.

"I have personally known the senior team at Prospect for more than a decade, and we welcome their support of our acquisition," said Benjamin Hochberg, partner with Lee Equity.

"Deb Shops continues an important strategic thrust by Prospect to provide financing to top-tier private equity sponsors," said Gautam Shirhattikar, an investment professional with Prospect Capital Management.

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a closed-end investment company that lends to and invests in private and microcap public businesses. Prospect Capital's investment objective is to generate both current income and capital appreciation through debt and equity investments.

Prospect Capital has elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). We are required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state laws and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Prospect Capital could have a material adverse effect on Prospect Capital and its shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future. Such statements speak only as of the time when made, and the Company undertakes no obligation to update any such statement now or in the future.

Please send investment proposals to:

Grier Eliasek
President and Chief Operating Officer
grier@prospectstreet.com
(212) 448-9577

-----END PRIVACY-ENHANCED MESSAGE-----

EX-99

Prospect Capital Makes $15 Million Second Lien Investment in Deb Shops

NEW YORK, NY -- 12/11/2007 -- Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that it has made a second lien secured debt investment of $15 million in Deb Shops, Inc. ("DEB"), a leading specialty apparel retailer based in Philadelphia, Pennsylvania.

Founded in 1932, DEB offers value-oriented apparel to junior and junior plus-size female consumers, targeting the ages of 10 through 25, a rapidly growing demographic. DEB is the only national retailer to offer both junior regular and plus-sized apparel in a unified store format. DEB has approximately 337 stores in regional malls and strip shopping centers in 42 states, with a concentration in the Midwest and Northeast.

Prospect's second lien secured debt, along with other financing, supports the acquisition of DEB by an affiliate of Lee Equity Partners ("Lee Equity"), a New York-based private equity firm founded by Thomas H. Lee.

Allen Questrom, a Senior Advisor to Lee Equity, and former Chief Executive Officer of JC Penney, Federated Department Stores, Neiman Marcus, and Barneys New York, has joined DEB as its new non-executive Chairman.

"I have personally known the senior team at Prospect for more than a decade, and we welcome their support of our acquisition," said Benjamin Hochberg, partner with Lee Equity.

"Deb Shops continues an important strategic thrust by Prospect to provide financing to top-tier private equity sponsors," said Gautam Shirhattikar, an investment professional with Prospect Capital Management.

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a closed-end investment company that lends to and invests in private and microcap public businesses. Prospect Capital's investment objective is to generate both current income and capital appreciation through debt and equity investments.

Prospect Capital has elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). We are required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state laws and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Prospect Capital could have a material adverse effect on Prospect Capital and its shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future. Such statements speak only as of the time when made, and the Company undertakes no obligation to update any such statement now or in the future.

Please send investment proposals to:

Grier Eliasek
President and Chief Operating Officer
grier@prospectstreet.com
(212) 448-9577