Exhibit (k)(2)

Execution copy

ADMINISTRATION AGREEMENT

This Administration Agreement (“Agreement”) dated and effective as of November 30, 2012 is by and between State Street Bank and Trust Company, a Massachusetts trust company (the “Administrator”), and Ares Dynamic Credit Allocation Fund, Inc., a Maryland corporation (the “Fund”).

WHEREAS, the Fund is a closed-end management investment company registered with the U.S. Securities and Exchange Commission (“SEC”), and has registered shares of its common stock, par value $0.001 per share (“Shares”) with the SEC by means of a registration statement (“Registration Statement”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and under the Securities Act of 1933, as amended (the “1933 Act”); and

WHEREAS, the Fund desires to retain the Administrator to furnish certain administrative services to the Fund, and the Administrator is willing to furnish such services, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:

1. Appointment of Administrator

The Fund hereby appoints the Administrator to act as administrator to the Fund for purposes of providing certain services for the period and on the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to render the services stated herein.

2. Delivery of Documents

As promptly as practicable after the date hereof, the Fund will deliver to the Administrator copies of each of the following documents with respect to the Fund, if any, and all final amendments and supplements thereto:

a. The Fund’s Articles of Incorporation and By-laws;

b. The Fund’s Registration Statement on Form N-2 (the “Registration Statement”) under the 1933 Act and the 1940 Act, including any Prospectus and Statement of Additional Information (“SAI”), if any, incorporated therein;

c. Resolutions of the Board of Directors of the Fund (the “Board”) certified by the Fund’s Secretary authorizing (i) the Fund to enter into this Agreement and (ii) certain individuals on behalf of the Fund to (a) give instructions to the Administrator pursuant to this Agreement and (b) sign checks and pay expenses;

d. The investment advisory agreement between the Fund and its investment adviser; and

e. Such other certificates or documents of the Fund which the Administrator may, in its reasonable discretion, deem necessary or appropriate in the proper performance of its duties.

3. Representations and Warranties of the Administrator

The Administrator represents and warrants to the Fund that:

a. It is a Massachusetts trust company duly organized and existing under the laws of The Commonwealth of Massachusetts;

b. It is duly qualified and has the trust power and authority to carry on its business in The Commonwealth of Massachusetts;

c. All requisite trust proceedings have been taken to authorize it to enter into and perform this Agreement;

d. It is empowered under applicable laws and by its organizational documents to enter into and perform the services contemplated by this Agreement;

e. No legal or administrative proceedings have been instituted or threatened which would materially impair the Administrator’s ability to perform its duties and obligations under this Agreement; and

f. Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Administrator or any law or regulation applicable to it.

4. Representations and Warranties of the Fund

The Fund represents and warrants to the Administrator that:

a. It is a corporation, duly organized, existing and in good standing under the laws of the State of Maryland;

b. It has the requisite corporate power and authority under applicable laws and by its Articles of Incorporation, as amended, and By-laws, as amended, to enter into and perform this Agreement;

c. All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement;

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d. It is an investment company properly registered with the SEC under the 1940 Act (or will be upon the effectiveness of the Registration Statement);

e. The Registration Statement has been filed and become effective;

f. No legal or administrative proceedings have been instituted or threatened which would materially impair the Fund’s ability to perform its duties and obligations under this Agreement; and

g. Its entrance into this Agreement will not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.

5. Administration Services

The Administrator shall provide the following services, subject to the authorization and direction of the Fund and, in each case where appropriate, the review and comment by the Fund’s independent accountants and legal counsel and in accordance with procedures which may be established from time to time between the Fund and the Administrator:

Fund Administration Treasury Services

a. Prepare for the review by designated officer(s) of the Fund financial information regarding the Fund that will be included in the Fund’s semi-annual and annual shareholder reports, Form N-Q reports and other quarterly reports (as mutually agreed upon), including tax footnote disclosures where applicable;

b. Coordinate the audit of the Fund’s financial statements by the Fund’s independent accountants, including the preparation of supporting audit workpapers and other schedules;

c. Prepare for the review by designated officer(s) of the Fund the Fund’s periodic financial reports required to be filed with the SEC on Form N-SAR and financial information required by Form N-2, proxy statements and such other reports, forms or filings as may be mutually agreed upon;

d. Prepare for the review by designated officer(s) of the Fund annual fund expense budgets, perform accrual analyses and roll-forward calculations and recommend changes to fund expense accruals on a periodic basis, arrange for payment of the Fund’s expenses, review calculations of fees paid to the Fund’s investment adviser, custodian, fund accountant, distributor and transfer agent, and obtain authorization of accrual changes and expense payments;

e. Provide periodic testing of the Fund with respect to compliance with the Internal Revenue Code’s mandatory qualification requirements, the requirements of the 1940 Act and the investment limitations by which the Fund must abide as described in the Registration Statement as may be mutually agreed upon, including quarterly compliance reporting to the designated officer(s) of the Fund as well as preparation of Board compliance materials;

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f. Prepare and furnish total return performance information for the Fund, calculated in accordance with applicable U.S. securities laws and regulations, as may be reasonably requested by Fund management;

g. Prepare and disseminate vendor survey information;

h. Provide sub-certificates in connection with the certification requirements of the Sarbanes-Oxley Act of 2002 with respect to the services provided by the Administrator;

i. Maintain certain books and records of the Fund as required under Rule 31a-1(b) of the 1940 Act, as may be mutually agreed upon;

Fund Administration Legal Services

j. Prepare the agenda and resolutions for all meetings of the Board of Directors of the Fund (the “Board”) and committees of the Board as requested by the Fund, make presentations at such Board and committee meetings where appropriate or upon reasonable request by the Fund, prepare minutes for such Board and committee meetings, and attend the Fund’s shareholder meetings and prepare minutes of such shareholder meetings;

k. Prepare and mail quarterly and annual Code of Ethics forms for Directors who are not “interested persons” of the Fund under the 1940 Act;

l. Prepare for filing with the SEC the following documents: Form N-CSR, Form N-PX and all amendments to the Registration Statement, including updates of the Prospectus and SAI for the Fund, if any, and any sticker supplements to the Prospectus and SAI, if any, for the Fund;

m. Prepare for filing with the SEC proxy statements and provide consultation on proxy solicitation matters;

n. Maintain general Board calendars and regulatory filings calendars;

o. Maintain copies of the Fund’s Articles of Incorporation and By-laws;

p. Assist in developing guidelines and procedures to improve overall compliance by the Fund with all applicable laws and regulations, including the rules and regulations of the SEC and the other Federal Securities Laws (as defined in Rule 38a-1 under the 1940 Act);

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q. Assist the Fund in the handling of routine regulatory examinations of the Fund and work closely with the Fund’s internal and external legal counsel in response to any non-routine regulatory matters;

r. Maintain awareness of significant emerging regulatory and legislative developments that may affect the Fund, update the Board and the investment adviser on those developments and provide related planning assistance where requested or appropriate;

s. Coordinate with insurance providers, including soliciting bids for Directors & Officers/Errors & Omissions (“D&O/E&O”) insurance and fidelity bond coverage, file fidelity bonds with the SEC and make related Board presentations;

t. Cooperate with the Fund and its Chief Compliance Officer (“CCO”) in respect of compliance matters, including the Fund Board’s review of the Administrator’s compliance policies and procedures that are relevant in respect of the Fund and the CCO’s oversight of the Fund’s compliance program, which includes oversight of compliance by the Administrator;

Fund Administration Tax Services

u. Prepare annual tax basis provisions for both excise and income tax purposes, including wash sales and all tax financial statement disclosure;

v. Prepare the Fund’s annual federal, state, and local income tax returns and extension requests for review and for execution and filing by the Fund’s independent accountants and execution and filing by the Fund’s treasurer, including Form 1120-RIC, Form 8613 and Form 1099-MISC;

w. Prepare annual shareholder reporting information relating to Form 1099-DIV;

x. Prepare financial information relating to Form 1099-DIV, including completion of the ICI Primary and Secondary forms, Qualified Dividend Income, Dividends Received Deduction, Alternative Minimum Tax, Foreign Tax Credit, United States Government obligations;

y. Review annual minimum distribution calculations (income and capital gain) for both federal and excise tax purposes prior to their declaration; and

z. Participate in discussions of potential tax issues with the Fund and the Fund’s audit firm.

Tax services, as described in “Fund Administration Tax Services” above and in this Agreement, do not include identification of passive foreign investment companies or Internal Revenue Code Section 1272(a)(6) tax calculations for asset backed securities.

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The Administrator shall perform such other services for the Fund that are mutually agreed to by the parties from time to time, for which the Fund will pay such fees as may be mutually agreed upon, including the Administrator’s reasonable out-of-pocket expenses. The provision of such services shall be subject to the terms and conditions of this Agreement.

The Administrator shall provide the office facilities and the personnel determined by it to perform the services contemplated herein.

6. Fees; Expenses; Expense Reimbursement

The Administrator shall be entitled to reasonable compensation for its services and expenses as Administrator, as agreed upon from time to time between the Fund and the Administrator. All rights of compensation and expense reimbursement under this Agreement for services performed as of the termination date shall survive the termination of this Agreement.

The Fund will bear all expenses that are incurred in its operation and not specifically assumed by the Administrator. Expenses to be borne by the Fund include, but are not limited to: organizational expenses; cost of services of the Fund’s independent accountants or other accountants and outside legal and tax advisers (including review, if any, by such accountants and advisers of the Registration Statement, Form N-CSR, Form N-Q, Form N-PX, Form N-SAR, proxy materials, federal and state tax qualification as a regulated investment company and other notices, registrations, reports, filings and materials prepared by the Administrator under this Agreement); cost of any services contracted for by the Fund directly from parties other than the Administrator; cost of trading operations and brokerage fees, commissions and transfer taxes in connection with the purchase and sale of securities for the Fund; investment advisory fees; taxes, insurance premiums and other fees and expenses applicable to its operation; costs incidental to any meetings of shareholders including, but not limited to, legal and accounting fees, proxy filing fees and the costs of preparation (e.g., typesetting, XBRL-tagging, page changes and all other print vendor and EDGAR charges, collectively referred to herein as “Preparation”), printing, distribution and mailing of any proxy materials; costs incidental to Board meetings, including fees and expenses of Board members; the salary and expenses of any officer, director or employee of the Fund; costs of Preparation, printing, distribution and mailing, as applicable, of the Registration Statement and any amendments and supplements thereto and shareholder reports; cost of Preparation and filing of the Fund’s tax returns, Form N-2, Form N-CSR, Form N-Q, Form N-PX and Form N-SAR, and all notices, registrations and amendments associated with applicable federal and state tax and securities laws; all applicable registration fees and filing fees required under federal and state securities laws; the cost of fidelity bond and D&O/E&O liability insurance; and the cost of independent pricing services used in computing the Fund’s net asset value.

The Administrator is authorized to and may employ, associate or contract with such person or persons as the Administrator may deem desirable to assist the Administrator in performing its duties under this Agreement; provided, however, that the compensation of such person or persons shall be paid by the Administrator and that the Administrator shall be as fully responsible to the Fund for the acts and omissions of any such person or persons as it is for its own acts and omissions.

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7. Instructions and Advice

a.       At any time, the Administrator may apply to any officer of the Fund or his or her designee for instructions and may consult with its own legal counsel or, in consultation with the Fund, outside counsel for the Fund or the independent accountants for the Fund at the expense of the Fund, with respect to any matter arising in connection with the services to be performed by the Administrator under this Agreement.

b.       The Administrator shall not be liable, and shall be indemnified by the Fund, for any action taken or omitted by it in good faith in reliance upon any such instructions or advice or upon any paper or document believed by it to be genuine and to have been signed by the proper person or persons. The Administrator shall not be held to have notice of any change of authority of any person until receipt of written notice thereof from the Fund. Nothing in this section shall be construed as imposing upon the Administrator any obligation to seek such instructions or advice, or to act in accordance with such advice when received.

8. Limitation of Liability and Indemnification

The Administrator agrees to perform its services under this Agreement with reasonable care and without negligence. The Administrator shall be responsible for the performance only of such duties as are set forth in this Agreement and, except as otherwise provided under Section 6, shall have no responsibility for the actions or activities of any other party, including other service providers. The Administrator shall have no liability in respect of any loss, damage or expense suffered by the Fund insofar as such loss, damage or expense arises from the performance of the Administrator’s duties hereunder in reliance upon records that were maintained for the Fund by entities other than the Administrator prior to the Administrator’s appointment as administrator for the Fund. The Administrator shall have no liability for any error of judgment or mistake of law or for any loss or damage resulting from the performance or nonperformance of its duties hereunder unless solely caused by or resulting from the negligence, bad faith or willful misconduct of the Administrator, its officers, employees or agents. The Administrator shall not be liable for any special, indirect, incidental, punitive or consequential damages, including lost profits, of any kind whatsoever (including, without limitation, attorneys’ fees) under any provision of this Agreement or for any such damages arising out of any act or failure to act hereunder, each of which is hereby excluded by agreement of the parties regardless of whether such damages were foreseeable or whether either party or any entity had been advised of the possibility of such damages. In any event, the Administrator’s cumulative liability for each calendar year (a “Liability Period”) under this Agreement regardless of the form of action or legal theory shall be limited to its total annual compensation earned and fees payable hereunder during the preceding Compensation Period, as defined herein, for any liability or loss suffered by the Fund including, but not limited to, any liability relating to qualification of the Fund as a regulated investment company or any liability relating to the Fund’s compliance with any federal or state tax or securities statute, regulation or ruling during such Liability Period. “Compensation Period” shall mean the calendar year ending immediately prior to each Liability Period in which the event(s) giving rise to the Administrator’s liability for that period have occurred. Notwithstanding the foregoing, the Compensation Period for purposes of calculating the annual cumulative liability of the Administrator for the Liability Period commencing on the date of this Agreement and terminating on December 31, 2012 shall be the date of this Agreement through December 31, 2012, calculated on an annualized basis, and the Compensation Period for the Liability Period commencing January 1, 2013 and terminating on December 31, 2013 shall be the date of this Agreement through December 31, 2012, calculated on an annualized basis.

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The Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action or communication disruption.

The Fund shall indemnify and hold the Administrator and its directors, officers, employees and agents harmless from all loss, cost, damage and expense, including reasonable fees and expenses for counsel, incurred by the Administrator resulting from any claim, demand, action or suit in connection with the Administrator’s acceptance of this Agreement, any action or omission by it in the performance of its duties hereunder, or as a result of acting upon any instructions reasonably believed by it to have been duly authorized by the Fund or upon reasonable reliance on information or records given or made by the Fund or its investment adviser, provided that this indemnification shall not apply to actions or omissions of the Administrator, its officers, employees or agents in cases of its or their own negligence, bad faith or willful misconduct.

The limitation of liability and indemnification contained herein shall survive the termination of this Agreement.

9. Confidentiality

The parties hereto agree that each shall treat confidentially all information provided by each party to the other party regarding its business and operations. All confidential information provided by a party hereto shall be used by any other party hereto solely for the purpose of rendering or receiving services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not be disclosed to any third party. The foregoing shall not be applicable to any information (i) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (ii) that is independently derived by any party hereto without the use of any information provided by the other party hereto in connection with this Agreement, (iii) that is required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or by operation of law or regulation, or (iv) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.

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10. Compliance with Governmental Rules and Regulations; Records

The Fund assumes full responsibility for complying with all securities, tax, commodities and other laws, rules and regulations applicable to it.

In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator agrees that all records which it maintains for the Fund shall at all times remain the property of the Fund, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request except as otherwise provided in Section 12. The Administrator further agrees that all records that it maintains for the Fund pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered as provided above. Records may be surrendered in either written or machine-readable form, at the option of the Administrator.

11. Services Not Exclusive

The services of the Administrator are not to be deemed exclusive, and the Administrator shall be free to render similar services to others. The Administrator shall be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Fund from time to time, have no authority to act or represent the Fund in any way or otherwise be deemed an agent of the Fund.

12. Effective Period and Termination

This Agreement shall remain in full force and effect for an initial term ending November 30, 2014 (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive two-year terms (each, a “Renewal Term”) unless a written notice of non-renewal is delivered by the non-renewing party no later than sixty (60) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. During the Initial Term and thereafter, either party may terminate this Agreement: (i) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either (a) failed to cure or (b) failed to establish a remedial plan to cure that is reasonably acceptable to the non-breaching party, within 60 days’ written notice of such breach, or (ii) in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction. Upon termination of this Agreement pursuant to this paragraph, the Fund shall pay the Administrator its compensation due and shall reimburse the Administrator for its costs, expenses and disbursements.

In the event of: (i) the Fund’s termination of this Agreement for any reason other than as set forth in the immediately preceding paragraph or (ii) a transaction not in the ordinary course of business pursuant to which the Administrator is not retained to continue providing services hereunder to the Fund (or its respective successor), the Fund shall pay the Administrator its compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by the Administrator) and shall reimburse the Administrator for its costs, expenses and disbursements. For the avoidance of doubt, no payment will be required pursuant to clause (ii) of this paragraph in the event of any transaction such as (a) the liquidation or dissolution of the Fund and distribution of the Fund’s assets as a result of the Board’s determination in its reasonable business judgment that the Fund is no longer viable (b) a merger of the Fund into, or the consolidation of the Fund with, another entity, or (c) the sale by the Fund of all, or substantially all, of its assets to another entity, in each of (b) and (c) where the Administrator is retained to continue providing services to the Fund (or its respective successor) on substantially the same terms as this Agreement.

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The provisions of Sections 6 and 8 of this Agreement shall survive termination of this Agreement for any reason.

13. Notices

Any notice or other communication authorized or required by this Agreement to be given to either party shall be in writing and deemed to have been given when delivered in person or by confirmed facsimile, by overnight delivery through a commercial courier service, or posted by certified mail, return receipt requested, to the following address (or such other address as a party may specify by written notice to the other):

If to the Fund:

Ares Dynamic Credit Allocation Fund, Inc.

2000 Avenue of the Stars, 12^th Floor

Los Angeles, CA 90067

Attn: Daniel Hall

Telephone: (310)201-4100

Facsimile: (310) 201-4170

If to the Administrator:

State Street Bank and Trust Company

P.O. Box 5049

Boston, MA 02206-5049

Attn: Mary Moran Zeven, Senior Vice President and Senior Counsel

Telephone: (617) 662-1783

Facsimile: (617) 662-2702

14. Amendment

This Agreement may be amended at any time in writing by mutual agreement of the parties hereto.

15. Assignment

This Agreement shall not be assigned by either party hereto without the prior consent in writing of the other party.

16. Successors

This Agreement shall be binding on and shall inure to the benefit of the Fund and the Administrator and their respective successors and permitted assigns.

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17. Data Protection

The Administrator shall implement and maintain a comprehensive written information security program that contains appropriate security measures to safeguard the personal information of the Fund’s shareholders, employees, directors and/or officers that the Administrator receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number or (f) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

18. Entire Agreement

This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all previous representations, warranties or commitments regarding the services to be performed hereunder whether oral or in writing.

19. Waiver

The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party.

20. Severability

If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances.

21. Governing Law

This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts, without regard to its conflicts of laws provisions.

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22. Reproduction of Documents

This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, xerographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

23. Counterparts

This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.

ARES DYNAMIC CREDIT ALLOCATION FUND, INC.
By:	/s/ Daniel J. Hall
Name:	Daniel J. Hall
Title:	General Counsel, Chief Legal Officer and Secretary

STATE STREET BANK AND TRUST COMPANY
By:	/s/ Michael F. Rogers
Name:	Michael F. Rogers
Title:	Executive Vice President

** Signature Page to Administration Agreement **