Edgar Filing: BABSON CAPITAL PARTICIPATION INVESTORS

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-Q

Quarterly Schedule of Portfolio Holdings of

Registered Management Investment Company

Investment Company Act file number 811-05531

Babson Capital Participation Investors

(Exact name of registrant as specified in charter)

1500 Main Street, Springfield, MA 01115

(Address of principal executive offices) (Zip code)

Christopher A. DeFrancis, Vice President and Secretary

1500 Main Street, Suite 2800, Springfield, MA 01115

(Name and address of agent for service)

Registrant's telephone number, including area code: 413-226-1000

___________________

Date of fiscal year end: 12/31

___________________

Date of reporting period: 03/31/13

___________________

CONSOLIDATED SCHEDULE OF INVESTMENTS	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities - 78.09%: (A)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Private Placement Investments - 72.86%

1492 Acquisition LLC
A leading producer of premium Italian cured meats and deli meats in the U.S.
14% Senior Subordinated Note due 2019	$	1,146,677	10/17/12	$	1,124,848	$	1,127,435
Limited Liability Company Unit Class A Common (B)	11,364 uts.		10/17/12		11,364		10,873
Limited Liability Company Unit Class A Preferred (B)	102 uts.		10/17/12		102,270		103,974
					1,238,482		1,242,282
A E Company, Inc.
A designer and manufacturer of machined parts and assembly structures for the commercial and military aerospace industries.
Common Stock (B)	184,615 shs.		11/10/09		184,615		403,583
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B)	92,308 shs.		11/10/09		68,566		201,793
					253,181		605,376
A H C Holding Company, Inc.
A designer and manufacturer of boilers and water heaters for the commercial sector.
Limited Partnership Interest (B)	12.26% int.		11/21/07		119,009		150,975

A S C Group, Inc.

A designer and manufacturer of high reliability encryption equipment, communications products, computing systems and electronic components primarily for the military and aerospace sectors.

Limited Liability Company Unit Class A (B)	2,186 uts.	*	78,340	87,388
Limited Liability Company Unit Class B (B)	1,479 uts.	10/09/09	52,999	59,125
* 10/09/09 and 10/27/10.			131,339	146,513

A W X Holdings Corporation

A provider of aerial equipment rental, sales and repair services to non-residential construction and maintenance contractors operating in the state of Indiana.

10.5% Senior Secured Term Note due 2014 (D)		$	420,000	05/15/08	413,944	315,000
13% Senior Subordinated Note due 2015 (D)		$	420,000	05/15/08	384,627	-
Common Stock (B)		60,000 shs.		05/15/08	60,000	-
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B)		21,099 shs.		05/15/08	35,654	-
					894,225	315,000
ABC Industries, Inc.
A manufacturer of mine and tunneling ventilation products in the U.S.
13% Senior Subordinated Note due 2019		$	500,000	08/01/12	450,515	495,961
Preferred Stock Series A (B)	125,000 shs.			08/01/12	125,000	112,785
Warrant, exercisable until 2022, to purchase
common stock at $.01 per share (B)		22,414 shs.		08/01/12	42,446	-
					617,961	608,746

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

ACP Cascade Holdings LLC
A manufacturer and distributor of vinyl windows and patio doors throughout the northwestern United States.
Limited Liability Company Unit Class B (B)	32 uts.		11/09/12	$	-	$	-

Advanced Manufacturing Enterprises LLC
A designer and manufacturer of large, custom gearing products for a number of critical customer applications.
14% Senior Subordinated Note due 2018	$	1,134,615	12/07/12		1,118,177		1,120,653
Limited Liability Company Unit (B)	1,154 uts.		12/07/12		115,385		87,487
					1,233,562		1,208,140
Advanced Technologies Holdings
A provider of factory maintenance services to industrial companies.
Preferred Stock Series A (B)	421 shs.		12/27/07		208,456		742,136
Convertible Preferred Stock Series B (B)	28 shs.		01/04/11		21,600		48,958
					230,056		791,094
All Current Holding Company
A specialty re-seller of essential electrical parts and components primarily serving wholesale distributors.
12% Senior Subordinated Note due 2015	$	603,697	09/26/08		577,603		603,697
Common Stock (B)	713 shs.		09/26/08		71,303		123,937
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	507 shs.		09/26/08		46,584		88,129
					695,490		815,763
American Hospice Management Holding LLC
A for-profit hospice care provider in the United States.
12% Senior Subordinated Note due 2013	$	1,687,503	*		1,673,898		1,687,503
Preferred Class A Unit (B)	1,706 uts.		**		170,600		233,624
Preferred Class B Unit (B)	808 uts.		06/09/08		80,789		171,901
Common Class B Unit (B)	16,100 uts.		01/22/04		1		-
Common Class D Unit (B)	3,690 uts.		09/12/06		-		-
* 01/22/04 and 06/09/08.					1,925,288		2,093,028
** 01/22/04 and 09/12/06.

AMS Holding LLC
A leading multi-channel direct marketer of high-value collectible coins and proprietary-branded jewelry and watches.
14.25% Senior Subordinated Note due 2019	$	1,148,898	10/04/12		1,127,132		1,135,496
Limited Liability Company Unit Class A Preferred (B)	114 uts.		10/04/12		113,636		113,630
					1,240,768		1,249,126

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Apex Analytix Holding Corporation
A provider of audit recovery and fraud detection services and software to commercial and retail businesses in the U.S. and Europe.
12.5% Senior Subordinated Note due 2017	$	1,012,500	04/28/09	$	924,818	$	1,012,500
Preferred Stock Series B (B)	1,623 shs.		04/28/09		162,269		216,400
Common Stock (B)	723 shs.		04/28/09		723		56,278
					1,087,810		1,285,178
Arch Global Precision LLC
A leading manufacturer of high tolerance precision components and consumable tools.
14.75% Senior Subordinated Note due 2018	$	776,668	12/21/11		759,341		790,527
Limited Liability Company Unit Class B (B)	28 uts.		12/21/11		28,418		39,461
Limited Liability Company Unit Class C (B)	222 uts.		12/21/11		221,582		307,663
					1,009,341		1,137,651
Arrow Tru-Line Holdings, Inc.
A manufacturer of hardware for residential and commercial overhead garage doors in North America.
12% Senior Subordinated Note due 2016 (D)	$	816,040	05/18/05		749,976		816,040
Preferred Stock (B)	33 shs.		10/16/09		33,224		78,844
Common Stock (B)	263 shs.		05/18/05		263,298		3,991
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)	69 shs.		05/18/05		59,362		1,046
					1,105,860		899,921
Baby Jogger Holdings LLC
A designer and marketer of premium baby strollers and stroller accessories.
14% Senior Subordinated Note due 2019	$	942,213	04/20/12		925,379		970,479
Common Stock (B)	754 shs.		04/20/12		75,376		116,349
					1,000,755		1,086,828
Blue Wave Products, Inc.
A distributor of pool supplies.
10% Senior Secured Term Note due 2018	$	317,730	10/12/12		311,750		313,646
13% Senior Subordinated Note due 2019	$	319,233	10/12/12		296,684		313,894
Common Stock (B)	51,064 shs.		10/12/12		51,064		50,326
Warrant, exercisable until 2022, to purchase
common stock at $.01 per share (B)	20,216 shs.		10/12/12		20,216		19,924
					679,714		697,790
BP SCI LLC
A leading value-added distributor of branded pipes, valves, and fittings (PVF) to diversified end markets.
14% Senior Subordinated Note due 2018	$	1,051,295	10/17/12		1,031,502		1,035,411
Limited Liability Company Unit Class A (B)	417 uts.		10/17/12		41,667		34,173
Limited Liability Company Unit Class B (B)	167 uts.		10/17/12		166,666		170,837
					1,239,835		1,240,421

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Bravo Sports Holding Corporation		-
A designer and marketer of niche branded consumer products including canopies, trampolines, in-line skates, skateboards, and urethane wheels.
12.5% Senior Subordinated Note due 2014	$	1,207,902	06/30/06	$	1,190,806	$	1,147,507
Preferred Stock Class A (B)	465 shs.		06/30/06		141,946		83,405
Common Stock (B)	1 sh.		06/30/06		152		-
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)	164 shs.		06/30/06		48,760		29,312
					1,381,664		1,260,224
C D N T, Inc.
A value-added converter and distributor of specialty pressure sensitive adhesives, foams, films, and foils.
10.5% Senior Secured Term Note due 2014	$	134,085	08/07/08		133,336		134,084
12.5% Senior Subordinated Note due 2015	$	429,070	08/07/08		410,402		429,070
Common Stock (B)	41,860 shs.		08/07/08		41,860		56,624
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	32,914 shs.		08/07/08		32,965		44,523
					618,563		664,301
Capital Specialty Plastics, Inc.
A producer of desiccant strips used for packaging pharmaceutical products.
Common Stock (B)	55 shs.		*		252		515,888
*12/30/97 and 05/29/99.

CHG Alternative Education Holding Company
A leading provider of publicly-funded, for profit pre-K-12 education services targeting special needs children at therapeutic day schools and "at risk" youth through alternative education programs.
13.5% Senior Subordinated Note due 2018	$	736,666	01/19/11		702,896		751,399
14% Senior Subordinated Note due 2019	$	190,011	08/03/12		186,482		191,122
Common Stock (B)	375 shs.		01/19/11		37,500		40,393
Warrant, exercisable until 2021, to purchase
common stock at $.01 per share (B)	295 shs.		01/19/11		29,250		31,751
					956,128		1,014,665
Church Services Holding Company
A provider of diversified residential services to homeowners in Houston, Dallas, and Austin markets.
14.5% Senior Subordinated Note due 2018	$	408,150	03/26/12		396,033		416,313
Common Stock (B)	1,327 shs.		*		132,700		123,424
Warrant, exercisable until 2022, to purchase
common stock at $.01 per share (B)	57 shs.		03/26/12		5,740		5,302
*03/26/12, 05/25/12 and 06/19/12.					534,473		545,039

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Clough, Harbour and Associates
An engineering service firm that is located in Albany, NY.
Preferred Stock (B)		147 shs.		12/02/08	$	146,594	$	203,462

Connecticut Electric, Inc.
A supplier and distributor of electrical products sold into the retail and wholesale markets.
10% Senior Subordinated Note due 2014 (D)		$	771,051	01/12/07		719,299		743,539
Limited Liability Company Unit Class A (B)		82,613 uts.		01/12/07		82,613		10,303
Limited Liability Company Unit Class C (B)		59,756 uts.		01/12/07		59,756		7,987
Limited Liability Company Unit Class D (B)	671,525 uts.			05/03/10		-		708,682
Limited Liability Company Unit Class E (B)		1,102 uts.		05/03/10		-		-
						861,668		1,470,511
Connor Sport Court International, Inc.
A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products.
Preferred Stock Series B-2 (B)		9,081 shs.		07/05/07		370,796		908,072
Preferred Stock Series C (B)		3,748 shs.		07/05/07		125,207		374,811
Common Stock (B)		380 shs.		07/05/07		4		168
Limited Partnership Interest (B)		6.88% int.		*		103,135		-
*08/12/04 and 01/14/05.						599,142		1,283,051

CorePharma LLC
A manufacturer of oral dose generic pharmaceuticals targeted at niche applications.
Warrant, exercisable until 2013, to purchase
common stock at $.001 per share (B)		10 shs.		08/04/05		72,617		415,944

Crane Rental Corporation
A crane rental company since 1960, headquartered in Florida.
13% Senior Subordinated Note due 2015		$	1,215,000	08/21/08		1,155,794		1,207,986
Common Stock (B)	135,000 shs.			08/21/08		135,000		55,570
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)		72,037 shs.		08/21/08		103,143		29,652
						1,393,937		1,293,208

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Custom Engineered Wheels, Inc.
A manufacturer of custom engineered, non-pneumatic plastic wheels and plastic tread cap tires used primarily for lawn and garden products and wheelchairs.
12.5% Senior Subordinated Note due 2016		$	765,865	10/27/09	$	700,802	$	765,865
Preferred Stock PIK (B)		156 shs.		10/27/09		156,468		117,011
Preferred Stock Series A (B)		114 shs.		10/27/09		104,374		85,491
Common Stock (B)		38 shs.		10/27/09		38,244		-
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)		28 shs.		10/27/09		25,735		-
						1,025,623		968,367
DPL Holding Corporation
A distributor and manufacturer of aftermarket undercarriage parts for medium and heavy duty trucks and trailers.
14% Senior Subordinated Note due 2019		$	1,302,758	05/04/12		1,279,175		1,312,315
Preferred Stock (B)		25 shs.		05/04/12		252,434		255,485
Common Stock (B)		25 shs.		05/04/12		28,048		17,382
						1,559,657		1,585,182
Duncan Systems, Inc.
A distributor of windshields and side glass for the recreational vehicle market.
10% Senior Secured Term Note due 2013		$	77,143	11/01/06		77,014		76,519
13% Senior Subordinated Note due 2014		$	488,572	11/01/06		472,090		481,598
Common Stock (B)	102,857 shs.			11/01/06		102,857		27,613
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)		32,294 shs.		11/01/06		44,663		8,670
						696,624		594,400
E S P Holdco, Inc.

A manufacturer of power protection technology for commercial office equipment, primarily supplying the office equipment dealer network.

14% Senior Subordinated Note due 2015	$	1,304,643	01/08/08	1,293,150	1,304,643
Common Stock (B)	349 shs.		01/08/08	174,701	190,476
				1,467,851	1,495,119
Eatem Holding Company

A developer and manufacturer of savory flavor systems for soups, sauces, gravies, and other products produced by food manufacturers for retail and foodservice end products.

12.5% Senior Subordinated Note due 2018	$	950,000	02/01/10	856,827	951,023
Common Stock (B)	50 shs.		02/01/10	50,000	42,377
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	119 shs.		02/01/10	107,100	101,044
				1,013,927	1,094,444

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

ELT Holding Company
A provider of web-based ethics and compliance training solutions for companies in the United States.
14% Senior Subordinated Note due 2019	$	929,204	03/01/12	$	912,889	$	945,289
Common Stock (B)	41 shs.		03/01/12		90,909		104,913
					1,003,798		1,050,202
F F C Holding Corporation
A leading U.S. manufacturer of private label frozen novelty and ice cream products.
16% Senior Subordinated Note due 2017	$	905,103	09/27/10		893,411		914,154
Limited Liability Company Unit Preferred (B)	171 uts.		09/27/10		58,345		184,278
Limited Liability Company Unit (B)	171 uts.		09/27/10		17,073		30,443
					968,829		1,128,875
F G I Equity LLC

A manufacturer of a broad range of filters and related products that are used in commercial, light industrial, healthcare, gas turbine, nuclear, laboratory, clean room, hotel, educational system, and food processing settings.

14.25% Senior Subordinated Note due 2018	$	112,749	02/29/12	112,782	115,004
Limited Liability Company Unit Class B-1 (B)	65,789 uts.		12/15/10	65,789	133,578
Limited Liability Company Unit Class B-2 (B)	8,248 uts.		12/15/10	8,248	16,747
Limited Liability Company Unit Class B-3 (B)	6,522 uts.		08/30/12	15,000	14,853
Limited Liability Company Unit Class C (B)	1,575 uts.		12/20/10	16,009	21,158
				217,828	301,340

Flutes, Inc.

An independent manufacturer of micro fluted corrugated sheet material for the food and consumer products packaging industries.

10% Senior Secured Term Note due 2014 (D)	$	524,791	04/13/06	519,050	498,551
14% Senior Subordinated Note due 2015 (D)	$	317,177	04/13/06	290,908	-
				809,958	498,551
G C Holdings

A leading manufacturer of gaming tickets, industrial recording charts, security-enabled point-of sale receipts, and medical charts and supplies.

12.5% Senior Subordinated Note due 2017	$	1,000,000	10/19/10	950,023	1,010,000
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	198 shs.		10/19/10	46,958	548,188
				996,981	1,558,188
GD Dental Services LLC

A provider of convenient "onestop" general, specialty, and cosmetic dental services with 21 offices located throughout South and Central Florida.

14% Senior Subordinated Note due 2019	$	1,178,854	10/05/12	1,156,383	1,167,463
Limited Liability Company Unit Common (B)	767 uts.		10/05/12	767	-
Limited Liability Company Unit Preferred (B)	76 uts.		10/05/12	75,920	74,088
				1,233,070	1,241,551

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

gloProfessional Holdings, Inc.
A marketer and distributor of premium mineral-based cosmetics, cosmeceuticals and professional hair care products to the professional spa and physician’s office channels.
14% Senior Subordinated Note due 2019		$	1,131,890	03/27/13	$	1,109,286	$	1,130,075
Common Stock (B)		1,181 shs.		03/27/13		118,110		112,204
						1,227,396		1,242,279
Golden County Foods Holding, Inc.
A manufacturer of frozen appetizers and snacks.
16% Senior Subordinated Note due 2015 (D)		$	1,012,500	11/01/07		938,215		-
14% PIK Note due 2015 (D)		$	250,259	12/31/08		217,699		-
8% Series A Convertible Preferred Stock, convertible into
common shares (B)	151,643 shs.			11/01/07		77,643		-
						1,233,557		-
H M Holding Company
A designer, manufacturer, and importer of promotional and wood furniture.
7.5% Senior Subordinated Note due 2014 (D)		$	362,700	10/15/09		271,181		-
Preferred Stock (B)		21 shs.		*		21,428		-
Preferred Stock Series B (B)		1,088 shs.		10/15/09		813,544		-
Common Stock (B)		180 shs.		02/10/06		180,000		-
Common Stock Class C (B)		296 shs.		10/15/09		-		-
Warrant, exercisable until 2013, to purchase
common stock at $.02 per share (B)		67 shs.		02/10/06		61,875		-
* 09/18/07 and 06/27/08.						1,348,028		-

Handi Quilter Holding Company
A designer and manufacturer of long-arm quilting machines and related components for the consumer quilting market.
12% Senior Subordinated Note due 2017		$	461,539	11/14/11		432,416		475,385
Common Stock (B)		38 shs.		11/14/11		38,461		72,594
Warrant, exercisable until 2021, to purchase
common stock at $.01 per share (B)		28 shs.		11/14/11		25,596		51,982
						496,473		599,961
Healthcare Direct Holding Company
A direct-to-customer marketer of discount dental plans.
14% Senior Subordinated Note due 2019		$	713,454	03/09/12		700,901		692,239
Common Stock (B)		517 shs.		03/09/12		51,724		21,863
						752,625		714,102

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)

Principal Amount,

Shares, Units or

Ownership Percentage

Acquisition

Date

Cost

Fair Value

Home Décor Holding Company

A designer, manufacturer and marketer of framed art and wall décor products.

Common Stock (B)

33 shs.

33,216

86,223

Warrant, exercisable until 2013, to purchase

common stock at $.02 per share (B)

106 shs.

105,618

274,139

* 06/30/04 and 08/19/04.

138,834

360,362

HOP Entertainment LLC
A provider of post production equipment and services to producers of television shows and motion pictures.
Limited Liability Company Unit Class F (B)	47 uts.		10/14/11	-	-
Limited Liability Company Unit Class G (B)	114 uts.		10/14/11	-	-
Limited Liability Company Unit Class H (B)	47 uts.		10/14/11	-	-
Limited Liability Company Unit Class I (B)	47 uts.		10/14/11	-	-
				-	-
Hospitality Mints Holding Company
A manufacturer of individually-wrapped imprinted promotional mints.
12% Senior Subordinated Note due 2016	$	1,098,837	08/19/08	1,052,512	1,071,189
Common Stock (B)	251 shs.		08/19/08	251,163	40,791
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	65 shs.		08/19/08	60,233	10,544
				1,363,908	1,122,524
HVAC Holdings, Inc.
A provider of integrated energy efficiency services and maintenance programs for HVAC systems.
14% Senior Subordinated Note due 2019	$	1,148,010	09/27/12	1,126,292	1,124,592
Preferred Stock Series A (B)	1,127 shs.		09/27/12	112,726	116,009
Common Stock (B)	910 shs.		09/27/12	910	-
				1,239,928	1,240,601
Ideal Tridon Holdings, Inc.
A designer and manufacturer of clamps and couplings used in automotive and industrial end markets.
Common Stock (B)	93 shs.		10/27/11	92,854	129,791

Insurance Claims Management, Inc.
A third party administrator providing auto and property claim administration services for insurance companies.
Common Stock (B)	47 shs.		02/27/07	1,424	167,518

International Offshore Services LLC
A leading provider of marine transportation services, platform decommissioning, and salvage services to oil and gas producers in the
shallow waters of the Gulf of Mexico.
14.25% Senior Subordinated Secured Note due 2017 (D)	$	1,350,000	07/07/09	1,236,405	-
Limited Liability Company Unit (B)	1,647 uts.		07/07/09	98,833	-
				1,335,238	-

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)

Principal Amount,

Shares, Units or

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

J A C Holding Enterprises, Inc.

A supplier of luggage racks and accessories to the original equipment manufacturers.
12.5% Senior Subordinated Note due 2017		$	833,333	12/20/10	$	737,644	$	831,865
Preferred Stock A (B)		165 shs.		12/20/10		165,000		128,589
Preferred Stock B (B)		0.06 shs.		12/20/10		-		47
Common Stock (B)		33 shs.		12/20/10		1,667		-
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B)		12 shs.		12/20/10		105,643		-
						1,009,954		960,501
Jason Partners Holdings LLC
A diversified manufacturing company serving various industrial markets.
Limited Liability Company Unit (B)		48 uts.		09/21/10		449,086		25,511

JMH Investors LLC
A developer and manufacturer of custom formulations for a wide variety of foods.
14.25% Senior Subordinated Note due 2019		$	1,040,105	12/05/12		1,020,013		1,035,241
Limited Liability Company Unit (B)	217,391 uts.			12/05/12		217,391		192,041
						1,237,404		1,227,282
K & N Parent, Inc.
A manufacturer and supplier of automotive aftermarket performance air filters and intake systems.
14% Senior Subordinated Note due 2017		$	882,674	12/23/11		867,523		909,154
Preferred Stock Series A (B)		102 shs.		12/23/11		96,578		96,577
Preferred Stock Series B (B)		29 shs.		12/23/11		27,335		27,332
Common Stock (B)		130 shs.		12/23/11		6,522		71,790
						997,958		1,104,853
K N B Holdings Corporation
A designer, manufacturer and marketer of products for the custom framing market.
15% Senior Subordinated Note due 2017		$	2,251,896	*		2,094,903		2,251,895
Common Stock (B)		71,053 shs.		05/25/06		71,053		36,738
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)		43,600 shs.		05/25/06		37,871		22,544
* 5/25/06 and 04/12/11.						2,203,827		2,311,177

K P H I Holdings, Inc.

A manufacturer of highly engineered plastic and metal components for a diverse range of end-markets, including medical, consumer and industrial, automotive and defense.

Common Stock (B)

232,826 shs.

12/10/10

232,826

265,782

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

K P I Holdings, Inc.
The largest player in the U.S. non-automotive, non-ferrous die casting segment.
12.75% Senior Subordinated Note due 2015	$	1,455,585	07/16/08	$	1,395,520	$	1,455,585
Convertible Preferred Stock Series C (B)	29 shs.		06/30/09		29,348		58,000
Convertible Preferred Stock Series D (B)	13 shs.		09/17/09		12,958		38,880
Common Stock (B)	235 shs.		07/15/08		234,783		20,619
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	51 shs.		07/16/08		50,836		4,465
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	67 shs.		09/17/09		-		5,919
					1,723,445		1,583,468
LPC Holding Company

A designer and manufacturer of precision-molded silicone rubber components that are utilized in the medical and automotive end markets.

13.5% Senior Subordinated Note due 2018	$	1,166,552	08/15/11	1,147,154	1,189,883
Common Stock (B)	105 shs.		08/15/11	105,019	129,688
				1,252,173	1,319,571
M V I Holding, Inc.

A manufacturer of large precision machined metal components used in equipment which services a variety of industries, including the oil and gas, mining, and defense markets.

Common Stock (B)	32 shs.		09/12/08	32,143	63,586
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	35 shs.		09/12/08	34,714	68,671
				66,857	132,257
Mail Communications Group, Inc.
A provider of mail processing and handling services, lettershop services, and commercial printing services.
Limited Liability Company Unit (B)	12,764 uts.		*	166,481	269,074
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)	1,787 shs.		05/04/07	22,781	37,673
* 05/04/07 and 01/02/08.				189,262	306,747

Manhattan Beachwear Holding Company
A designer and distributor of women’s swimwear.
12.5% Senior Subordinated Note due 2018	$	419,971	01/15/10	380,787	419,971
15% Senior Subordinated Note due 2018	$	108,968	10/05/10	107,338	105,086
Common Stock (B)	35 shs.		10/05/10	35,400	30,289
Common Stock Class B (B)	118 shs.		01/15/10	117,647	100,664
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B)	104 shs.		01/15/10	94,579	89,088
				735,751	745,098

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Corporate Restricted Securities: (A) (Continued)

Principal Amount,

Shares, Units or

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Marshall Physicians Services LLC

A provider of emergency department and hospital medicine services to hospitals located in the state of Kentucky. The Company was founded in 1999 and is owned by seven practicing physicians.

13% Senior Subordinated Note due 2016	$	446,765	09/20/11	$	439,325	$	455,123
Limited Liability Company Unit Class A (B)	2,900 uts.		09/20/11		60,000		41,163
Limited Liability Company Unit Class D (B)	291 uts.		09/20/11		-		4,137
					499,325		500,423
MBWS Ultimate Holdco, Inc.

A provider of services throughout North Dakota that address the fluid management and related transportation needs of an oil well.

12% Senior Subordinated Note due 2016	$	1,117,495	*	1,043,554	1,128,670
Preferred Stock Series A (B)	1,388 shs.		09/07/10	138,797	414,851
Common Stock (B)	162 shs.		03/01/11	16,226	48,419
Common Stock (B)	153 shs.		09/07/10	15,282	45,729
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B)	103 shs.		03/01/11	10,325	30,785
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	386 shs.		09/07/10	38,623	115,369
* 09/07/10 and 03/01/11.				1,262,807	1,783,823

MedSystems Holdings LLC
A manufacturer of enteral feeding products, such as feeding tubes and other products related to assisted feeding.
13% Senior Subordinated Note due 2015	$	636,369	08/29/08	598,931	636,369
Preferred Unit (B)	66 uts.		08/29/08	66,451	83,841
Common Unit Class A (B)	671 uts.		08/29/08	671	32,390
Common Unit Class B (B)	250 uts.		08/29/08	63,564	12,052
				729,617	764,652
MEGTEC Holdings, Inc.
A supplier of industrial and environmental products and services to a broad array of industries.
Preferred Stock (B)	56 shs.		09/24/08	54,040	82,402
Limited Partnership Interest (B)	0.74% int.		09/16/08	205,932	284,673
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	18 shs.		09/24/08	18,237	24,044
				278,209	391,119
Merex Holding Corporation

A provider of after-market spare parts and components, as well as Maintenance, Repair and Overhaul services for “out of production” or “legacy” aerospace and defense systems that are no longer effectively supported by the original equipment manufacturers.

14% Senior Subordinated Note due 2018		$	424,528	09/22/11	417,304	437,264
Limited Liability Company Unit Series B (B)	155,945 uts.			09/22/11	155,945	151,674
					573,249	588,938

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

MicroGroup, Inc.
A manufacturer of precision parts and assemblies, and a value-added supplier of metal tubing and bars.
7% Senior Subordinated Note due 2014 (D)	$	902,727	*	$	865,676	$	225,682
Preferred Stock Series A (B)	519 shs.		10/10/12		498,734		-
Common Stock (B)	238 shs.		*		238,000		-
Common Stock Series B (B)	597 shs.		10/10/12		6		-
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B)	87 shs.		*		86,281		-
* 08/12/05 and 09/11/06.					1,688,697		225,682

MNX Holding Company
An international third party logistics Company providing customized logistics services to customers across the globe.
14% Senior Subordinated Note due 2019	$	1,215,354	11/02/12		1,192,109		1,194,375
Common Stock (B)	45 shs.		11/02/12		44,643		28,274
					1,236,752		1,222,649
Monessen Holding Corporation
A designer and manufacturer of a broad line of gas, wood, and electric hearth products and accessories.
15% Senior Subordinated Note due 2015 (D)	$	823,794	06/28/11		547,745		-
7% Senior Subordinated Note due 2014 (D)	$	1,350,000	06/28/11		1,281,479		-
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B)	81 shs.		03/31/06		73,125		-
					1,902,349		-
Motion Controls Holdings
A manufacturer of high performance mechanical motion control and linkage products.
14.25% Senior Subordinated Note due 2017	$	944,533	11/30/10		931,373		944,211
Limited Liability Company Unit Class B-1 (B)	93,750 uts.		11/30/10		-		74,958
Limited Liability Company Unit Class B-2 (B)	8,501 uts.		11/30/10		-		6,797
					931,373		1,025,966
NABCO, Inc.
A producer of explosive containment vessels in the United States.
Common Stock (B)	429 shs.		12/20/12		306,091		175,461

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

NetShape Technologies, Inc.

A manufacturer of powder metal and metal injection molded precision components used in industrial, consumer, and other applications.

14% Senior Subordinated Note due 2014	$	1,061,463	02/02/07	$	993,035	$	1,008,389
Limited Partnership Interest of
Saw Mill PCG Partners LLC (B)	1.38% int.		02/01/07		588,077		-
Limited Liability Company Unit Class D of
Saw Mill PCG Partners LLC (B)	9 uts.		*		8,873		-
Limited Liability Company Unit Class D-1 of
Saw Mill PCG Partners LLC (B)	121 uts.		09/30/09		121,160		203,869
Limited Liability Company Unit Class D-2 of
Saw Mill PCG Partners LLC (B)	68 uts.		04/29/11		34,547		47,071
* 12/18/08 and 09/30/09.					1,745,692		1,259,329

Nicoat Acquisitions LLC

A manufacturer of water-based and ultraviolet coatings for high-performance graphic arts, packaging and other specialty coating applications.

14% Senior Subordinated Note due 2018	$	486,205	11/05/10	453,607	491,067
Limited Liability Company Unit Series B (B)	17,241 uts.		11/05/10	17,241	20,501
Limited Liability Company Unit Series B (B)	34,931 uts.		11/05/10	34,931	41,536
Limited Liability Company Unit Series F (B)	52,172 uts.		11/05/10	-	91,604
				505,779	644,708
Northwest Mailing Services, Inc.

A producer of promotional materials for companies that use direct mail as part of their customer retention and loyalty programs.

12% Senior Subordinated Note due 2016	$	1,492,105	*	1,310,553	1,478,287
Limited Partnership Interest (B)	1,740 uts.		*	174,006	38,205
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B)	2,605 shs.		*	260,479	57,191
* 07/09/09 and 08/09/10.				1,745,038	1,573,683

NT Holding Company
A leading developer, manufacturer and provider of medical products used primarily in interventional pain management.
12% Senior Subordinated Note due 2019	$	883,117	02/02/11	825,124	891,948
Common Stock (B)	126 shs.		*	125,883	114,949
Warrant, exercisable until 2021, to purchase
common stock at $.01 per share (B)	59 shs.		02/02/11	52,987	53,648
* 02/02/11 and 06/30/11.				1,003,994	1,060,545

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

O E C Holding Corporation
A provider of elevator maintenance, repair and modernization services.
13% Senior Subordinated Note due 2017	$	444,445	06/04/10	$	415,764	$	428,252
Preferred Stock Series A (B)	554 shs.		06/04/10		55,354		20,149
Preferred Stock Series B (B)	311 shs.		06/04/10		31,125		11,330
Common Stock (B)	344 shs.		06/04/10		344		-
					502,587		459,731
Ontario Drive & Gear Ltd.
A manufacturer of all-wheel drive, off-road amphibious vehicles and related accessories.
Limited Liability Company Unit (B)	1,942 uts.		01/17/06		302,885		759,020
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B)	328 shs.		01/17/06		90,424		128,150
					393,309		887,170
P K C Holding Corporation
A manufacturer of plastic film and badges for the general industrial, medical, and food industries.
14% Senior Subordinated Note due 2016	$	1,624,644	12/21/10		1,604,271		1,640,890
Preferred Stock Class A (B)	29 shs.		12/21/10		180,380		286,496
Common Stock (B)	29 shs.		12/21/10		13,500		-
					1,798,151		1,927,386
P P T Holdings LLC

A high-end packaging solutions provider that targets customers who have multiple packaging needs, require a high number of low volume SKUs, short lead times, technical expertise, and overall supply chain management.

15% Senior Subordinated Note due 2017	$	956,625	12/20/10	942,775	948,956
Limited Liability Company Unit Class A (B)	33 uts.		12/20/10	106,071	80,823
Limited Liability Company Unit Class B (B)	33 uts.		12/20/10	1,072	80,823
				1,049,918	1,110,602
Pacific Consolidated Holdings LLC
A manufacturer of rugged, mobile liquid and gaseous oxygen and nitrogen generating systems used in the global defense, oil and gas, and medical sectors.
0% Senior Subordinated Note due 2014	$	42,187	12/18/12	-	42,187

Paradigm Packaging, Inc.

A manufacturer of plastic bottles and closures for the nutritional, pharmaceutical, personal care, and food packaging markets.

12% Senior Subordinated Note due 2016	$	843,750	12/19/00	842,240	843,750
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	197 shs.		12/21/00	140,625	64,997
				982,865	908,747

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Pearlman Enterprises, Inc.

A developer and distributor of tools, equipment and supplies to the natural and engineered stone industry.
Preferred Stock Series A (B)		1,236 shs.		05/22/09	$	59,034	$	-
Preferred Stock Series B (B)		7,059 shs.		05/22/09		290,050		-
Common Stock (B)		21,462 shs.		05/22/09		993,816		-
						1,342,900		-
Petroplex Inv Holdings LLC
A leading provider of acidizing services to E&P customers in the Permian Basin.
16% Senior Subordinated Note due 2018		$	1,108,738	11/29/12		1,082,467		1,094,622
Limited Liability Company Unit (B)	156,250 uts.			11/29/12		156,250		120,138
						1,238,717		1,214,760
Postle Aluminum Company LLC
A manufacturer and distributor of aluminum extruded products.
15% Senior Subordinated Note due 2013		$	881,440	06/03/10		877,840		881,440
Limited Liability Company Unit Class A (B)		733 uts.		10/02/06		270,000		125,583
Limited Liability Company Unit (B)		76 uts.		05/22/09		340		13,025
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)		4,550 shs.		10/02/06		65,988		779,871
						1,214,168		1,799,919
Precision Wire Holding Company
A manufacturer of specialty medical wires that are used in non-elective minimally invasive surgical procedures.
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B)		109 shs.		11/12/09		107,970		152,100

Qualis Automotive LLC
A distributor of aftermarket automotive brake and chassis products.
Common Stock (B)	187,500 shs.			05/28/04		187,500		159,847
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)	199,969 shs.			05/28/04		199,969		170,478
						387,469		330,325
R A J Manufacturing Holdings LLC
A designer and manufacturer of women’s swimwear sold under a variety of licensed brand names.
14.5% Senior Subordinated Note due 2014		$	831,458	12/15/06		813,339		792,789
Limited Liability Company Unit (B)		1,497 uts.		12/15/06		149,723		56,901
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)		2 shs.		12/15/06		69,609		26,851
						1,032,671		876,541

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

REVSpring, Inc.

A provider of accounts receivable management and revenue cycle management services to customers in the healthcare, financial and utility industries.

14% Senior Subordinated Note due 2018	$	1,143,496	*	$	1,124,776	$	1,160,671
Limited Liability Company Unit Class A (B)	13,548 uts.		*		135,477		158,760
* 10/21/11 and 08/03/12.					1,260,253		1,319,431

RM Holding Company
A specialty distributor of home medical care equipment.
13% Senior Subordinated Note due 2018	$	460,318	02/09/12		435,751		474,127
Preferred Stock Series (B)	39,679 shs.		02/09/12		39,678		42,634
Common Stock (B)	369 shs.		02/09/12		4		29,655
Warrant, exercisable until 2022, to purchase
preferred stock A at $.01 per share (B)	12,088 shs.		02/09/12		11,980		12,760
Warrant, exercisable until 2022, to purchase
preferred stock B at $.01 per share (B)	7,067 shs.		02/09/12		7,067		7,594
Warrant, exercisable until 2022, to purchase
common stock at $.01 per share (B)	185 shs.		02/09/12		-		14,870
					494,480		581,640
Rose City Holding Company
A designer and printer of folding cartons and packaging for food and beverage manufacturers on the West Coast.
14.5% Senior Subordinated Note due 2018	$	590,369	12/11/12		579,081		583,393
Preferred Stock (B)	39,062 shs.		12/11/12		39,062		36,252
Common Stock (B)	39 shs.		12/11/12		4		-
					618,147		619,645
Safety Infrastructure Solutions

A provider of trench safety equipment to a diverse customer base across multiple end markets in Texas and the Southwestern United States.

15% Senior Subordinated Note due 2018	$	656,250	03/30/12	647,502	669,375
Preferred Stock (B)	2,098 shs.		03/30/12	83,920	90,013
Common Stock (B)	983 shs.		03/30/12	9,830	17,518
				741,252	776,906
Sencore Holding Company
A designer, manufacturer, and marketer of decoders, receivers and modulators sold to broadcasters, satellite, cable and telecom operators for encoding/decoding analog and digital transmission video signals.
12.5% Senior Subordinated Note due 2014 (D)	$	1,157,231	01/15/09	826,004	289,308

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Signature Systems Holding Company
A seller and installer of a variety of modular surfaces, industrial matting and related products used for ground protection.
12.5% Senior Subordinated Note due 2021	$	755,088	03/15/13	$	711,813	$	753,957
Common Stock (B)	76 shs.		03/15/13		75,509		71,734
Warrant, exercisable until 2023, to purchase
common stock A at $.01 per share (B)	31 shs.		03/15/13		28,316		-
					815,638		825,691
Smart Source Holdings LLC
A short-term computer rental company.
12% Senior Subordinated Note due 2015	$	1,176,924	*		1,129,827		1,176,924
Limited Liability Company Unit (B)	328 uts.		*		337,796		328,075
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B)	83 shs.		*		87,231		83,102
* 08/31/07 and 03/06/08.					1,554,854		1,588,101

Snacks Parent Corporation

The world’s largest provider of trail mixes and a leading provider of snack nuts, dried fruits, and other healthy snack products.

13% Senior Subordinated Note due 2017	$	889,609	11/12/10	849,852	898,505
Preferred Stock A (B)	1,132 shs.		11/12/10	107,498	142,894
Preferred Stock B (B)	525 shs.		11/12/10	49,884	66,309
Common Stock (B)	6,579 shs.		11/12/10	6,579	28,923
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B)	1,806 shs.		11/12/10	1,806	7,940
				1,015,619	1,144,571
SouthernCare Holdings, Inc.
A hospice company providing palliative care services to terminally ill patients.
Common Stock (B)	909 shs.		12/01/11	90,909	84,970

Spartan Foods Holding Company
A manufacturer of branded pizza crusts and pancakes.
14.25% Senior Subordinated Note due 2017	$	1,200,671	12/15/09	1,074,968	1,145,760
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	136 shs.		12/15/09	120,234	40,239
				1,195,202	1,185,999
Specialty Commodities, Inc.
A distributor of specialty food ingredients.
Common Stock (B)	15,882 shs.		10/23/08	158,824	119,619
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	5,852 shs.		10/23/08	53,285	44,076
				212,109	163,695

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Stag Parkway Holding Company
A distributor of RV parts and accessories in the United States.
13% Senior Subordinated Note due 2018	$	1,134,972	12/19/12	$	1,082,382	$	1,125,240
Common Stock (B)	118 shs.		12/19/12		118,203		112,290
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B)	35 shs.		12/19/12		31,848		-
					1,232,433		1,237,530

Strata/WLA Holding Corporation

A leading independent anatomic pathology laboratory that conducts over 320,000 tests annually to customers in 40 U.S. states and in Canada and Venezuela.

14.5% Senior Subordinated Note due 2018	$	959,148	07/01/11	943,703	863,233
Preferred Stock Series A (B)	76 shs.		07/01/11	76,046	30,493
				1,019,749	893,726
Sundance Investco LLC
A provider of post-production services to producers of movies and television shows.
Limited Liability Company Unit Class A (B)	3,405 shs.		03/31/10	-	-

Sunrise Windows Holding Company

A manufacturer and marketer of premium vinyl windows exclusively selling to the residential remodeling and replacement market.

14% Senior Subordinated Note due 2017	$	1,007,548	12/14/10	963,147	1,002,076
14% Senior Subordinated PIK Note due 2017	$	81,597	08/14/12	78,367	81,154
Common Stock (B)	38 shs.		12/14/10	38,168	15,556
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B)	37 shs.		12/14/10	37,249	15,181
				1,116,931	1,113,967
Synteract Holdings Corporation
A provider of outsourced clinical trial management services to pharmaceutical and biotechnology companies.
14% Senior Subordinated Note due 2019	$	1,746,188	09/02/08	1,677,705	1,746,188
Preferred Stock Series D (B)	257 shs.		02/27/13	25,678	10,966
Redeemable Preferred Stock Series A (B)	678 shs.		09/02/08	6,630	-
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	6,778 shs.		09/02/08	59,661	-
				1,769,674	1,757,154

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Terra Renewal LLC

A provider of wastewater residual management and required environmental reporting, permitting, nutrient management planning and record keeping to companies involved in poultry and food processing.

12% Senior Subordinated Note due 2014 (D)	$	664,062	*	$	644,369	$	-
7.44% Term Note due 2013 (C)	$	711,001	08/10/12		711,001		604,351
9.25% Term Note due 2013 (C)	$	1,568	08/31/12		1,568		1,332
Common Stock Class B	32 shs.		*		4,448		-
Limited Partnership Interest of
Saw Mill Capital Fund V, LLC (B)	2.27% int.		**		117,464		-
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	41 shs.		04/28/06		33,738		-
* 04/28/06 and 09/13/06.					1,512,588		605,683
**03/01/05 and 10/10/08.

Torrent Group Holdings, Inc.

A contractor specializing in the sales and installation of engineered drywells for the retention and filtration of stormwater and nuisance water flow.

14.5% Senior Subordinated Note due 2014 (D)	$	1,300,003	10/26/07	1,136,835	1,253,492
Series B Preferred Stock (B)	97 shs.		03/31/10	-	144,906
Common Stock (B)	273 shs.		03/31/10	219,203	-
				1,356,038	1,398,398
Transpac Holding Company
A designer, importer, and wholesaler of home décor and seasonal gift products.
12% Senior Subordinated Note due 2015	$	938,651	10/31/07	896,489	895,908
Common Stock (B)	110 shs.		10/31/07	110,430	5,670
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B)	50 shs.		10/31/07	46,380	2,560
				1,053,299	904,138
Tranzonic Companies (The)

A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom supplies and sanitary care products.

13% Senior Subordinated Note due 2015	$	542,400	02/05/98	541,643	542,400
Common Stock (B)	315 shs.		02/04/98	315,000	612,900
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B)	222 shs.		02/05/98	184,416	431,949
				1,041,059	1,587,249

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Truck Bodies & Equipment International

A designer and manufacturer of accessories for heavy and medium duty trucks, primarily dump bodies, hoists, various forms of flat-bed bodies, landscape bodies and other accessories.

12% Senior Subordinated Note due 2013	$	1,222,698	*	$	1,178,972	$	1,222,698
Preferred Stock Series B (B)	128 shs.		10/20/08		127,677		90,617
Common Stock (B)	393 shs.		*		423,985		-
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B)	81 shs.		*		84,650		-
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B)	558 shs.		10/20/08		-		-
* 07/19/05 and 12/22/05.					1,815,284		1,313,315

TruStile Doors, Inc.
A manufacturer and distributor of interior doors.
Limited Liability Company Unit (B)	5,888 uts.		02/28/11		109,375		196,600
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	3,060 shs.		04/11/03		36,032		23,969
					145,407		220,569
U-Line Corporation
A manufacturer of high-end, built-in, undercounter ice making, wine storage and refrigeration appliances.
Common Stock (B)	96 shs.		04/30/04		96,400		108,713
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	122 shs.		04/30/04		112,106		137,582
					208,506		246,295
U M A Enterprises, Inc.
An importer and wholesaler of home décor products.
Convertible Preferred Stock (B)	470 shs.		02/08/08		469,565		753,022

Visioneering, Inc.
A designer and manufacturer of tooling and fixtures for the aerospace industry.
10.5% Senior Secured Term Loan due 2013	$	414,706	05/17/07		414,287		415,166
13% Senior Subordinated Note due 2014	$	370,588	05/17/07		360,981		370,588
18% PIK Convertible Preferred Stock (B)	21,361 shs.		03/13/09		41,440		69,594
Common Stock (B)	70,588 shs.		05/17/07		70,588		57,112
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B)	20,003 shs.		05/17/07		31,460		16,184
					918,756		928,644

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Principal Amount,

Shares, Units or

Corporate Restricted Securities: (A) (Continued)

Ownership

Percentage

Acquisition

Date

Cost

Fair Value

Vitex Packaging Group, Inc.

A manufacturer of specialty packaging, primarily envelopes and tags used on tea bags.
Class B Unit (B)	406,525 uts.		10/29/09	$	184,266	$	-
Class C Unit (B)	450,000 uts.		10/29/09		413,244		391,157
Limited Liability Company Unit Class A (B)	383,011 uts.		*		229,353		-
Limited Liability Company Unit Class B (B)	96,848 uts.		07/19/04		96,848		-
* 07/19/04 and 10/29/09.					923,711		391,157

Wellborn Forest Holding Company
A manufacturer of semi-custom kitchen and bath cabinetry.
12.13% Senior Subordinated Note due 2016	$	911,250	11/30/06		867,531		820,125
Common Stock (B)	101 shs.		11/30/06		101,250		-
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B)	51 shs.		11/30/06		45,790		-
					1,014,571		820,125
Wheaton Holding Corporation
A distributor and manufacturer of laboratory supply products and packaging.
Preferred Stock Series B (B)	703 shs.		06/08/10		70,308		-
Common Stock (B)	353 shs.		06/08/10		353		-
					70,661		-
Whitcraft Holdings, Inc.
A leading independent manufacturer of precision formed, machined, and fabricated flight-critical aerospace components.
12% Senior Subordinated Note due 2018	$	794,521	12/16/10		741,751		802,466
Common Stock (B)	205 shs.		12/16/10		205,480		149,347
Warrant, exercisable until 2018, to purchase
common stock at $.02 per share (B)	55 shs.		12/16/10		49,334		40,135
					996,565		991,948
Workplace Media Holding Company
A direct marketer specializing in providing advertisers with access to consumers in the workplace.
13% Senior Subordinated Note due 2015 (D)	$	654,247	05/14/07		601,454		-
Limited Partnership Interest (B)	12.26% int.		05/14/07		61,308		-
Warrant, exercisable until 2015, to purchase
common stock at $.02 per share (B)	47 shs.		05/14/07		44,186		-
					706,948		-
WP Supply Holding Corporation
A distributor of fresh fruits and vegetables to grocery wholesalers and foodservice distributors in the upper Midwest.
14.5% Senior Subordinated Note due 2018	$	880,429	11/03/11		865,585		880,762
Common Stock (B)	1,500 shs.		11/03/11		150,000		140,598
					1,015,585		1,021,360

Total Private Placement Investments (E)				$	103,262,162	$	97,006,412

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

					Shares or
	Interest			Due	Principal				Market
Corporate Restricted Securities: (A) (Continued)	Rate			Date	Amount		Cost		Value

Rule 144A Securities - 5.23%:

Bonds 5.23%
ArcelorMittal		6.125	%	06/01/18	$	500,000	$	513,750	$	540,000
Calumet Specialty Products Partners L.P.		9.625		08/01/20		500,000		491,518		563,750
Cornerstone Chemical Company		9.375		03/15/18		375,000		385,313		382,500
First Data Corporation		7.375		06/15/19		250,000		250,000		265,938
FMG Resources		7.000		11/01/15		250,000		256,500		261,875
Hilcorp Energy Company		7.625		04/15/21		325,000		311,967		357,500
J.B. Poindexter Co., Inc.		9.000		04/01/22		500,000		500,000		522,500
Lear Corporation		4.750		01/15/23		375,000		367,500		365,625
Lennar Corporation		4.750		11/15/22		375,000		369,375		367,500
MEG Energy Corporation		6.375		01/30/23		500,000		500,000		520,000
Neustar Inc.		4.500		01/15/23		375,000		362,813		358,125
Penske Corporation		4.875		07/11/22		500,000		497,989		527,280
Samson Investment Company		9.750		02/15/20		350,000		344,313		371,875
ServiceMaster Company		7.000		08/15/20		500,000		500,000		517,500
Tronox Finance LLC		6.375		08/15/20		375,000		365,625		363,750
Valeant Pharmaceuticals International		7.000		10/01/20		250,000		250,784		269,375
Welltec A/S		8.000		02/01/19		375,000		368,262		409,688
Total Bonds								6,635,709		6,964,781

Convertible Preferred Stock - 0.00%
ETEX Corporation (B)						194		-		-
Total Convertible Preferred Stock								-		-

Preferred Stock - 0.00%
TherOX, Inc. (B)						26		-		-
Total Preferred Stock								-		-

Common Stock - 0.00%
Touchstone Health Partnership (B)						292		-		-
Total Common Stock								-		-

Total Rule 144A Securities								6,635,709		6,964,781

Total Corporate Restricted Securities							$	109,897,871	$	103,971,193

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

	Interest			Due	Principal				Market
Corporate Public Securities - 21.04%: (A)	Rate			Date	Amount		Cost		Value

Bonds -21.02%
Accuride Corp		9.500	%	08/01/18	$	500,000	$	482,874	$	511,250
Alcoa, Inc.		6.150		08/15/20		600,000		628,955		653,254
Alere, Inc.		9.000		05/15/16		300,000		313,936		315,375
Alliant Techsystems Inc.		6.875		09/15/20		500,000		536,186		538,750
Ally Financial, Inc.		5.500		02/15/17		750,000		764,413		811,307
Alta Mesa Financial Services		9.625		10/15/18		750,000		727,983		791,250
Anglogold Holdings PLC		5.375		04/15/20		600,000		605,123		635,086
Avis Budget Car Rental		9.750		03/15/20		375,000		375,000		442,504
B E Aerospace, Inc.		6.875		10/01/20		250,000		256,516		276,563
Bank of America Corporation		5.875		01/05/21		600,000		622,603		708,570
Bill Barrett Corporation		7.000		10/15/22		500,000		479,800		523,750
Brunswick Corporation		7.125		08/01/27		500,000		504,881		526,250
C R H America, Inc.		5.300		10/15/13		500,000		489,257		511,517
Calumet Specialty Products Partners L.P.		9.375		05/01/19		375,000		351,561		420,000
CCO Holdings Capital Corporation		5.250		09/30/22		500,000		495,211		491,250
Centurytel, Inc.		5.000		02/15/15		500,000		506,679		527,519
CHC Helicopter SA		9.250		10/15/20		1,000,000		930,858		1,063,125
CIT Group, Inc.		5.000		08/15/22		500,000		500,000		533,894
Citigroup, Inc.		5.500		04/11/13		500,000		499,552		500,583
Continental Resources, Inc.		5.000		09/15/22		500,000		511,283		531,250
DaVita, Inc.		5.750		08/15/22		500,000		500,000		519,375
Duke Realty Limited Partnership		3.875		10/15/22		500,000		508,419		513,203
Ensco PLC		3.250		03/15/16		600,000		598,589		639,073
EP Energy/EP Finance, Inc.		9.375		05/01/20		500,000		508,109		577,500
Equifax, Inc.		4.450		12/01/14		500,000		506,853		526,419
GATX Corporation		4.750		05/15/15		500,000		502,411		530,533
General Electric Capital Corporation		5.500		01/08/20		500,000		498,549		592,484
Goldman Sachs Group, Inc.		4.750		07/15/13		500,000		494,083		505,999
Headwaters, Inc.		7.625		04/01/19		305,000		305,133		326,350
Health Management Association		6.125		04/15/16		250,000		255,930		274,375
HealthSouth Corporation		7.750		09/15/22		450,000		451,023		489,375
Hertz Corporation		6.750		04/15/19		220,000		217,050		240,075
International Game Technology		7.500		06/15/19		500,000		499,802		596,878
Jabil Circuit, Inc.		4.700		09/15/22		500,000		499,962		498,125
Johnson Controls, Inc.		5.500		01/15/16		500,000		451,497		558,612
Kraft Foods, Inc.		5.375		02/10/20		500,000		512,913		594,889
Masco Corporation		7.125		03/15/20		350,000		349,997		408,596
Morgan Stanley		5.500		01/26/20		500,000		498,000		572,878

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

	Interest			Due	Principal				Market
Corporate Public Securities (A)	Rate			Date	Amount		Cost		Value

NBC Universal Media LLC		5.150	%	04/30/20	$	500,000	$	499,453	$	592,581
Nexeo Solutions LLC		8.375		03/01/18		20,000		20,000		19,500
Niska Gas Storage Partners LLC		8.875		03/15/18		500,000		505,638		521,250
Omnova Solutions, Inc.		7.875		11/01/18		750,000		763,587		798,750
Peabody Energy Corporation		6.000		11/15/18		500,000		500,565		531,250
Perry Ellis International, Inc.		7.875		04/01/19		375,000		371,583		393,750
Precision Drilling Corporation		6.625		11/15/20		250,000		257,295		266,875
Qwest Diagnostic, Inc.		4.750		01/30/20		500,000		499,019		547,190
Sprint Nextel Corporation		6.000		12/01/16		500,000		510,954		542,500
Steelcase, Inc.		6.375		02/15/21		500,000		507,314		552,797
Tech Data Corporation		3.750		09/21/17		500,000		506,745		520,771
Thermadyne Holdings Corporation		9.000		12/15/17		250,000		263,999		272,500
Time Warner Cable, Inc.		5.000		02/01/20		500,000		492,460		568,945
Tyson Foods, Inc.		4.500		06/15/22		500,000		515,795		544,063
Unit Corporation		6.625		05/15/21		500,000		494,113		523,750
Weatherford International Limited		4.500		04/15/22		500,000		520,669		515,050
Total Bonds								25,970,180		27,989,308

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

	Interest			Due					Market
Corporate Public Securities (A)	Rate			Date	Shares		Cost		Value

Common Stock - 0.02%

Intrepid Potash, Inc. (B)						185	$	5,920	$	3,471
Nortek, Inc. (B)						100		1		7,106
Rue21, Inc. (B)						350		6,650		10,287
Total Common Stock								12,571		20,864

Total Corporate Public Securities							$	25,982,751	$	28,010,172

	Interest			Due	Principal				Market
Short-Term Securities:	Rate/Yield^			Date	Amount		Cost		Value

Commercial Paper -7.89%
Bacardi Ltd		0.310	%	04/10/13	$	2,250,000	$	2,249,826	$	2,249,826
Enbridge Energy Partners		0.340		04/05/13		2,250,000		2,249,915		2,249,915
Oneok, Inc.		0.300		04/08/13		2,000,000		1,999,883		1,999,883
Volvo Group Treasury NA		0.300		04/10/13		2,000,000		1,999,850		1,999,850
Westar Energy Inc.		0.320		04/11/13		2,000,000		1,999,822		1,999,822
Total Short-Term Securities							$	10,499,296	$	10,499,296

Total Investments		107.02	%				$	146,379,918	$	142,480,661
Other Assets		6.58								8,762,575
Liabilities		(13.60	)							(18,105,675)
Total Net Assets		100.00	%						$	133,137,561

(A)	In each of the convertible note, warrant, and common stock investments, the issuer has agreed to provide certain registration rights.

(B)	Non-income producing security.

(C)	Variable rate security; rate indicated is as of March 31, 2013.

(D)	Defaulted security; interest not accrued.

(E)	Illiquid security. As of March 31, 2013, the values of these securities amounted to $97,006,412 or 72.86% of net assets.

^	Effective yield at purchase

PIK	Payment-in-kind

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Industry Classification:	Fair Value/ Market Value			Fair Value/ Market Value

AEROSPACE - 2.95%			BROADCASTING & ENTERTAINMENT - 0.87%
A E Company, Inc.	$	605,376	HOP Entertainment LLC	$	-
Alliant Techsystems Inc.		538,750	NBC Universal Media LLC		592,581
B E Aerospace, Inc.		276,563	Time Warner Cable, Inc.		568,945
Merex Holding Corporation		588,938	Sundance Investco LLC		-
Visioneering, Inc.		928,644	Workplace Media Holding Company		-
Whitcraft Holdings, Inc.		991,948			1,161,526
		3,930,219	BUILDINGS & REAL ESTATE - 1.97%
AUTOMOBILE - 5.58%			ACP Cascade Holdings LLC		-
Accuride Corp		511,250	Duke Realty Limited Partnership		513,203
Avis Budget Car Rental		442,504	Lennar Corporation		367,500
DPL Holding Corporation		1,585,182	Masco Corporation		408,596
Ideal Tridon Holdings, Inc.		129,791	Sunrise Windows Holding Company		1,113,967
J A C Holding Enterprises, Inc.		960,501	TruStile Doors, Inc.		220,569
Jason Partners Holdings LLC		25,511			2,623,835
Johnson Controls, Inc.		558,612	CHEMICAL, PLASTICS & RUBBER - 2.03%
K & N Parent, Inc.		1,104,853	Capital Specialty Plastics, Inc.		515,888
Lear Corporation		365,625	Cornerstone Chemical Company		382,500
Ontario Drive & Gear Ltd.		887,170	Nicoat Acquisitions LLC		644,708
Penske Corporation		527,280	Omnova Solutions, Inc.		798,750
Qualis Automotive LLC		330,325	Tronox Finance LLC		363,750
		7,428,604			2,705,596
BEVERAGE, DRUG & FOOD - 8.79%			CONSUMER PRODUCTS - 9.25%
1492 Acquisition LLC		1,242,282	AMS Holding LLC		1,249,126
Bacardi Ltd		2,249,826	Baby Jogger Holdings LLC		1,086,828
Eatem Holding Company		1,094,444	Bravo Sports Holding Corporation		1,260,224
F F C Holding Corporation		1,128,875	Custom Engineered Wheels, Inc.		968,367
Golden County Foods Holding, Inc.		-	gloProfessional Holdings, Inc.		1,242,279
Hospitality Mints Holding Company		1,122,524	Handi Quilter Holding Company		599,961
JMH Investors LLC		1,227,282	K N B Holdings Corporation		2,311,177
Kraft Foods, Inc.		594,889	Manhattan Beachwear Holding Company		745,098
Snacks Parent Corporation		1,144,571	Perry Ellis International, Inc.		393,750
Spartan Foods Holding Company		1,185,999	R A J Manufacturing Holdings LLC		876,541
Specialty Commodities, Inc.		163,695	Tranzonic Companies (The)		1,587,249
Tyson Foods, Inc.		544,063			12,320,600
		11,698,450

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value			Fair Value/ Market Value

CONTAINERS, PACKAGING & GLASS - 4.10%			DIVERSIFIED/CONGLOMERATE, SERVICE - 9.47%
Flutes, Inc.	$	498,551	A S C Group, Inc.	$	146,513
P K C Holding Corporation		1,927,386	A W X Holdings Corporation		315,000
P P T Holdings LLC		1,110,602	Advanced Technologies Holdings		791,094
Paradigm Packaging, Inc.		908,747	Anglogold Holdings PLC		635,086
Rose City Holding Company		619,645	Apex Analytix Holding Corporation		1,285,178
Vitex Packaging Group, Inc.		391,157	Bank of America Corporation		708,570
		5,456,088	C R H America, Inc.		511,517
DISTRIBUTION - 4.66%			Church Services Holding Company		545,039
Blue Wave Products, Inc.		697,790	Clough, Harbour and Associates		203,462
BP SCI LLC		1,240,421	Crane Rental Corporation		1,293,208
Duncan Systems, Inc.		594,400	ELT Holding Company		1,050,202
RM Holding Company		581,640	Equifax, Inc.		526,419
Signature Systems Holding Company		825,691	HVAC Holdings, Inc.		1,240,601
Stag Parkway Holding Company		1,237,530	Insurance Claims Management, Inc.		167,518
WP Supply Holding Corporation		1,021,360	Mail Communications Group, Inc.		306,747
		6,198,832	Nexeo Solutions LLC		19,500
DIVERSIFIED/CONGLOMERATE,			Northwest Mailing Services, Inc.		1,573,683
MANUFACTURING - 9.35%			Pearlman Enterprises, Inc.		-
A H C Holding Company, Inc.		150,975	Safety Infrastructure Solutions		776,906
Advanced Manufacturing Enterprises LLC		1,208,140	ServiceMaster Company		517,500
Arrow Tru-Line Holdings, Inc.		899,921			12,613,743
C D N T, Inc.		664,301	ELECTRONICS - 1.87%
F G I Equity LLC		301,340	Connecticut Electric, Inc.		1,470,511
G C Holdings		1,558,188	Jabil Circuit, Inc.		498,125
J.B. Poindexter Co., Inc.		522,500	Tech Data Corporation		520,771
K P H I Holdings, Inc.		265,782			2,489,407
K P I Holdings, Inc.		1,583,468	FINANCIAL SERVICES - 6.13%
LPC Holding Company		1,319,571	Ally Financial, Inc.		811,307
MEGTEC Holdings, Inc.		391,119	Alta Mesa Financial Services		791,250
Nortek, Inc.		7,106	CIT Group, Inc.		533,894
O E C Holding Corporation		459,731	Citigroup, Inc.		500,583
Postle Aluminum Company LLC		1,799,919	GATX Corporation		530,533
Truck Bodies & Equipment International		1,313,315	General Electric Capital Corporation		592,484
		12,445,376	Goldman Sachs Group, Inc.		505,999
			Morgan Stanley		572,878
			REVSpring, Inc.		1,319,431
			Volvo Group Treasury NA		1,999,850
					8,158,209

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2013
(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value			Fair Value/ Market Value

HEALTHCARE, EDUCATION & CHILDCARE - 7.64%			MACHINERY - 4.79%
Alere, Inc.	$	315,375	ABC Industries, Inc.	$	608,746
American Hospice Management Holding LLC		2,093,028	Arch Global Precision LLC		1,137,651
CHG Alternative Education Holding Company		1,014,665	E S P Holdco, Inc.		1,495,119
DaVita, Inc.		519,375	M V I Holding, Inc.		132,257
GD Dental Services LLC		1,241,551	Motion Controls Holdings		1,025,966
Healthcare Direct Holding Company		714,102	NetShape Technologies, Inc.		1,259,329
HealthSouth Corporation		489,375	Pacific Consolidated Holdings LLC		42,187
Marshall Physicians Services LLC		500,423	Thermadyne Holdings Corporation		272,500
Qwest Diagnostic, Inc.		547,190	Welltec A/S		409,688
SouthernCare Holdings, Inc.		84,970			6,383,443
Strata/WLA Holding Corporation		893,726	MEDICAL DEVICES/BIOTECH - 1.86%
Synteract Holdings Corporation		1,757,154	ETEX Corporation		-
Touchstone Health Partnership		-	Health Management Association		274,375
Wheaton Holding Corporation		-	MedSystems Holdings LLC		764,652
		10,170,934	MicroGroup, Inc.		225,682
			NT Holding Company		1,060,545
HOME & OFFICE FURNISHINGS, HOUSEWARES,			Precision Wire Holding Company		152,100
AND DURABLE CONSUMER PRODUCTS - 3.70%			TherOX, Inc.		-
Connor Sport Court International, Inc.		1,283,051			2,477,354
H M Holding Company		-	MINING, STEEL, IRON & NON-PRECIOUS
Home Décor Holding Company		360,362	METALS - 1.09%
Monessen Holding Corporation		-	Alcoa, Inc.		653,254
Steelcase, Inc.		552,797	FMG Resources		261,875
Transpac Holding Company		904,138	Peabody Energy Corporation		531,250
U-Line Corporation		246,295			1,446,379
U M A Enterprises, Inc.		753,022	NATURAL RESOURCES - 2.16%
Wellborn Forest Holding Company		820,125	ArcelorMittal		540,000
		4,919,790	Headwaters, Inc.		326,350
			Intrepid Potash, Inc.		3,471
LEISURE, AMUSEMENT, ENTERTAINMENT - 0.84%			Westar Energy Inc.		1,999,822
Brunswick Corporation		526,250			2,869,643
International Game Technology		596,878
		1,123,128

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)	Babson Capital Participation Investors
March 31, 2013
(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value			Fair Value/ Market Value

OIL & GAS - 10.20%			TRANSPORTATION - 2.03%
Bill Barrett Corporation	$	523,750	CHC Helicopter SA	$	1,063,125
Calumet Specialty Products Partners L.P.		983,750	Hertz Corporation		240,075
Continental Resources, Inc.		531,250	MNX Holding Company		1,222,649
Enbridge Energy Partners		2,249,915	NABCO, Inc.		175,461
Ensco PLC		639,073			2,701,310
EP Energy/EP Finance, Inc.		577,500	WASTE MANAGEMENT / POLLUTION - 1.51%
Hilcorp Energy Company		357,500	Terra Renewal LLC		605,683
International Offshore Services LLC		-	Torrent Group Holdings, Inc.		1,398,398
MBWS Ultimate Holdco, Inc.		1,783,823			2,004,081
MEG Energy Corporation		520,000
Niska Gas Storage Partners LLC		521,250
Oneok, Inc.		1,999,883	Total Investments - 107.02%	$	142,480,661
Petroplex Inv Holdings LLC		1,214,760
Precision Drilling Corporation		266,875
Samson Investment Company		371,875
Unit Corporation		523,750
Weatherford International Limited		515,050
		13,580,004
PHARMACEUTICALS - 0.51%
CorePharma LLC		415,944
Valeant Pharmaceuticals International		269,375
		685,319
RETAIL STORES - 0.01%
Rue21, Inc.		10,287

TECHNOLOGY - 1.61%
First Data Corporation		265,938
Sencore Holding Company		289,308
Smart Source Holdings LLC		1,588,101
		2,143,347
TELECOMMUNICATIONS - 2.05%
All Current Holding Company		815,763
CCO Holdings Capital Corporation		491,250
Centurytel, Inc.		527,519
Neustar Inc.		358,125
Sprint Nextel Corporation		542,500
		2,735,157

Fair Value Hierarchy

The Company categorizes its investments measured at fair value in three levels, based on the inputs and assumptions used to determine fair value. These levels are as follows:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Trust’s own assumptions in determining the fair value of investments)

The following is a summary of the inputs used to value the Trust’s net assets as of March 31, 2013:

Assets:	Total		Level 1		Level 2		Level 3
Restricted Securities
Corporate Bonds	$	81,302,097	$	-	$	6,964,781	$	74,337,316
Common Stock - U.S.		9,198,773		-		-		9,198,773
Preferred Stock		5,985,222		-		-		5,985,222
Partnerships and LLCs		7,485,101		-		-		7,485,101
Public Securities
Corporate Bonds		27,989,308		-		27,989,308		-
Common Stock - U.S.		20,864		20,864		-		-
Short-term Securities		10,499,296		-		10,499,296		-

Total	$	142,480,661	$	20,864	$	45,453,385	$	97,006,412

See information disaggregated by security type and industry classification in the Consolidated Schedule of Investments.

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

														Transfers in
	Beginning													and/or		Ending
Assets:	balance at 12/31/2012		Included in earnings		Purchases			Sales			Prepayments			out of Level 3		balance at 03/31/2013
Restricted Securities
Corporate Bonds	$	81,060,756	$	139,123	$	2,683,082		$	(1,652,667	)	$	(7,892,978	)	$	-	$	74,337,316
Common Stock - U.S.		7,793,109		1,313,373		221,928			(129,637	)		-			-		9,198,773
Preferred Stock		5,786,187		173,357		25,678			-			-			-		5,985,222
Partnerships and LLCs		6,890,276		610,447		(15,622	)		-			-			-		7,485,101
	$	101,530,328	$	2,236,300	$	2,915,066		$	(1,782,304	)	$	(7,892,978	)	$	-	$	97,006,412

ITEM 2. CONTROLS AND PROCEDURES.

(a) The principal executive officer and principal financial officer of the Registrant evaluated the effectiveness of the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act") as of a date within 90 days of the filing date of this report and based on that evaluation have concluded that such disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed by the Registrant on Form N-Q is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b) There have been changes in the Registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act)("internal controls") that occurred during the Registrant's last fiscal quarter. The Registrant's investment adviser, Babson Capital Management LLC, who maintains the Registrant's internal controls, revised its internal controls to oversee State Street Bank & Trust who now provides certain administrative and accounting services to the Registrant.

ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) are attached hereto as an exhibit.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Babson Capital Participation Investors

By (Signature and Title)*

/s/ Michael L. Klofas

Michael L. Klofas, President

Date May 30, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By (Signature and Title)*

/s/ Michael L. Klofas

Michael L. Klofas, President

Date May 30, 2013

By (Signature and Title)*

/s/ James M. Roy

James M. Roy, Vice President and

Chief Financial Officer

Date May 30, 2013

* PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.