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)

Janice M. Bishop, Vice President, Secretary and Chief Legal Officer

Independence Wharf, 470 Atlantic Avenue, Boston, MA 02210

(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: 03/31/16

___________________

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2016

(Unaudited)


Corporate Restricted Securities - 84.90%: (A)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Private Placement Investments - 71.18%: (C)
1492 Acquisition LLC
A leading producer of premium Italian cured meats and deli meats in the U.S.
14% Senior Subordinated Note due 10/17/2019	$	694,597	10/17/12		$	686,223	$	694,597
Limited Liability Company Unit Class A Preferred (B)	102 uts.		10/17/12			102,270		131,676
Limited Liability Company Unit Class A Common (B)	11,364 uts.		10/17/12			11,364		111,268
						799,857		937,541

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 12/20/2016 (D)	$	420,000	05/15/08			413,944		405,300
13% Senior Subordinated Note due 12/20/2016 (D)	$	420,000	05/15/08			384,627		—
Common Stock (B)	60,000 shs.		05/15/08			60,000		—
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	21,099 shs.		05/15/08			35,654		—
						894,225		405,300

ABC Industries, Inc.
A manufacturer of mine and tunneling ventilation products in the U.S.
13% Senior Subordinated Note due 07/31/2019	$	181,818	08/01/12			170,259		181,818
Preferred Stock Series A (B)	125,000 shs.		08/01/12			125,000		232,289
Warrant, exercisable until 2022, to purchase common stock at $.02 per share (B)	22,414 shs.		08/01/12			42,446		39,301
						337,705		453,408

Advanced Manufacturing Enterprises LLC
A designer and manufacturer of large, custom gearing products for a number of critical customer applications.
Limited Liability Company Unit (B)	1,945 uts.			*		207,910		7,777
* 12/07/12, 07/11/13 and 06/30/15.

Advanced Technologies Holdings
A provider of factory maintenance services to industrial companies.
Preferred Stock Series A (B)	152 shs.		12/27/07			75,131		294,699
Convertible Preferred Stock Series B (B)	28 shs.		01/04/11			21,600		53,940
						96,731		348,639

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

AFC - Dell Holding Corporation
A distributor and provider of inventory management services for "C-Parts" used by OEMs in their manufacturing and production facilities.
12.5% Senior Subordinated Note due 09/27/2020		$	1,194,350	03/27/15		$	1,173,934	$	1,217,337
Preferred Stock (B)	1,122 shs.			03/27/15			112,154		112,722
Common Stock (B)	346 shs.			03/27/15			346		—
							1,286,434		1,330,059

Airxcel Holdings
A leading manufacturer of a broad range of climate control solutions, including air-conditioners, heat pumps, cooking appliances, furnaces, powered vents, and water heaters.
12.5% Senior Subordinated Note due 11/18/2020		$	1,466,770	11/18/14			1,442,810		1,477,025
Limited Liability Company Unit	288 uts.			11/18/14			288,000		306,663
							1,730,810		1,783,688

AMS Holding LLC
A leading multi-channel direct marketer of high-value collectible coins and proprietary-branded jewelry and watches.
Limited Liability Company Unit Class A Preferred (B)	114 uts.			10/04/12			113,636		331,345


Animal Supply Company
A distributor of pet products to independent pet stores, veterinary clients and other pet specialty retailers.
10.5% Second Lien Term Loan due 09/17/2019		$	1,759,500	03/30/15			1,739,474		1,670,894


ARI Holding Corporation
A leading national supplier of products used primarily by specialty contractors.
11.5% Senior Subordinated Note due 02/01/2020		$	1,706,704		*		1,686,272		1,710,392
Limited Partnership Interest	524 uts.			08/01/14			523,950		612,763
* 05/21/13 and 08/01/14.							2,210,222		2,323,155


ASC Holdings, Inc.
A manufacturer of capital equipment used by corrugated box manufacturers.
13% Senior Subordinated Note due 05/18/2021		$	743,096	11/19/15			728,982		740,900
Limited Liability Company Unit (B)	111,100 uts.			11/18/15			111,100		49,662
							840,082		790,562


Aurora Parts & Accessories LLC
A distributor of aftermarket over-the-road semi-trailer parts and accessories sold to customers across North America.
11% Senior Subordinated Note due 02/17/2022		$	1,515,400	08/17/15			1,487,566		1,527,153
Preferred Stock (B)	210 shs.			08/17/15			209,390		207,642
Common Stock (B)	210 shs.			08/17/15			210		—
							1,697,166		1,734,795

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value
Avantech Testing Services LLC
A manufacturer of custom Non-Destructive Testing ("NDT") systems and provider of NDT and inspections services primarily to the oil country tubular goods market.
15% Senior Subordinated Note due 01/31/2020 (D)		$	500,587	07/31/14		$	491,228	$	—
Limited Liability Company Unit	45,504 uts.				*		—		—
* 07/31/14 and 10/14/15.							491,228		—


Blue Wave Products, Inc.
A distributor of pool supplies.
10% Senior Secured Term Note due 09/30/2018		$	198,582	10/12/12			196,627		198,582
13% Senior Subordinated Note due 09/30/2019		$	328,942	10/12/12			314,275		328,942
Common Stock (B)	51,064 shs.			10/12/12			51,064		184,835
Warrant, exercisable until 2022, to purchase common stock at $.01 per share (B)	20,216 shs.			10/12/12			20,216		73,175
							582,182		785,534

BlueSpire Holding, Inc.
A marketing services firm that integrates strategy, technology, and content to deliver customized marketing solutions for clients in the senior living, financial services and healthcare end markets.
12.5% Senior Subordinated Note due 06/30/2021		$	1,585,909	06/30/15			1,557,300		1,542,004
Common Stock (B)	1,417 shs.			06/30/15			156,800		114,637
							1,714,100		1,656,641

BP SCI LLC
A leading value-added distributor of branded pipes, valves, and fittings (PVF) to diversified end markets.
Limited Liability Company Unit Class A (B)	417 uts.			10/17/12			41,667		134,171
Limited Liability Company Unit Class B (B)	167 uts.			10/17/12			166,666		244,757
							208,333		378,928


CG Holdings Manufacturing Company
A coating provider serving the automotive, agricultural, heavy truck and other end markets.
13% Senior Subordinated Note due 11/01/2019		$	1,412,605		*		1,354,208		1,426,731
Preferred Stock (B)	1,350 shs.				*		134,972		159,761
Preferred Stock (B)	489 shs.				*		48,721		57,904
Common Stock (B)	140 shs.				*		14,864		67,834
Warrant, exercisable until 2023, to purchase common stock at $.01 per share (B)	58 shs.				*		5,430		28,176
* 05/09/13 and 11/01/13.							1,558,195		1,740,406

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

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 01/19/2018		$	771,020	01/19/11		$	755,678	$	771,020
14% Senior Subordinated Note due 08/03/2019		$	201,909	08/03/12			199,668		201,909
Common Stock (B)	375 shs.			01/19/11			37,500		46,355
Warrant, exercisable until 2021, to purchase common stock at $.01 per share (B)	295 shs.			01/19/11			29,250		36,437
							1,022,096		1,055,721

Church Services Holding Company
A provider of diversified residential services to homeowners in the Houston, Dallas, and Austin markets.
14.5% Senior Subordinated Note due 03/26/2018		$	190,933	03/26/12			188,125		175,046
10% Senior Subordinated Note due 09/15/2099		$	6,492	09/15/14			6,492		—
Common Stock (B)	1,327 shs.				*		132,700		—
Warrant, exercisable until 2022, to purchase common stock at $.01 per share (B)	57 shs.			03/26/12			5,740		—
* 03/26/12, 05/25/12 and 06/19/12.							333,057		175,046


Clarion Brands Holding Corp.
A portfolio of six over-the-counter (OTC) pharmaceutical brands whose products are used to treat tinnitus or ringing of the ear, excessive sweating, urinary tract infections, muscle pain, and skin conditions.
12.5% Senior Subordinated Note due 04/01/2021		$	1,603,799	10/01/14			1,577,036		1,619,837
Common Stock (B)	1,568 shs.			10/01/14			156,818		85,436
							1,733,854		1,705,273

Clough, Harbour and Associates
An engineering service firm that is located in Albany, NY.
Preferred Stock (B)	147 shs.			12/02/08			146,594		672,523



Compass Chemical International LLC
A manufacturer and supplier of standard and specialty formulated chemicals, primarily phosphoric acid derivatives called phosphonates.
13% Senior Subordinated Note due 10/04/2020		$	1,527,328	03/04/15			1,501,975		1,525,784
Limited Liability Company Unit (B)	230 uts.			03/04/15			230,000		237,599
							1,731,975		1,763,383

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

Connecticut Electric, Inc.
A supplier and distributor of electrical products sold into the retail and wholesale markets.
Limited Liability Company Unit Class A (B)	82,613 uts.			01/12/07	$	82,613	$	104,200
Limited Liability Company Unit Class C (B)	59,756 uts.			01/12/07		59,756		80,209
Limited Liability Company Unit Class D (B)	671,525 uts.			05/03/10		—		829,401
Limited Liability Company Unit Class E (B)	1,102 uts.			05/03/10		—		121,420
						142,369		1,135,230

CTM Holding, Inc.
A leading owner and operator of coin-operated children's rides, penny presses and candy kiosks in the U.S.
15% Senior Subordinated Note due 11/22/2019		$	1,268,134	11/22/13		1,251,348		1,254,891
Common Stock (B)	78 shs.			11/22/13		443,182		484,218
						1,694,530		1,739,109

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.
Preferred Stock PIK (B)	156 shs.			10/26/09		156,468		265,493
Preferred Stock Series A (B)	114 shs.			10/27/09		104,374		193,974
Common Stock (B)	38 shs.			10/26/09		38,244		119,834
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	28 shs.			10/27/09		25,735		87,556
						324,821		666,857

DPL Holding Corporation
A distributor and manufacturer of aftermarket undercarriage parts for medium and heavy duty trucks and trailers.
14% Senior Subordinated Note due 05/04/2019		$	1,383,110	05/04/12		1,368,640		1,383,110
Preferred Stock (B)	25 shs.			05/04/12		252,434		329,419
Common Stock (B)	25 shs.			05/04/12		28,048		7,292
						1,649,122		1,719,821

Dunn Paper
A provider of specialty paper for niche product applications.
Preferred Stock (B)	261 shs.			12/30/14		261,364		885,158

Eagle Family Foods, Inc.
A producer of low-cost branded and private label canned milk.
10.05% Last Out Term Loan due 06/30/2016		$	1,725,000	12/22/15		1,700,211		1,702,730

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
ECG Consulting Group
A healthcare management consulting company who provides strategic, financial, operational, and technology related consulting services to healthcare providers.
11.75% Senior Subordinated Note due 11/21/2020		$	1,306,986	11/21/14	$	1,282,473	$	1,333,125
Limited Liability Company Unit (B)	230 uts.			11/19/14		71,875		84,644
						1,354,348		1,417,769

ERG Holding Company LLC
A provider of inpatient and outpatient clinical trial services to pharmaceutical companies and contract research organizations.
13.5% Senior Subordinated Note due 10/04/2019		$	958,522	04/04/14		945,095		961,702
Common Stock (B)	31 shs.			04/04/14		77,533		83,727
						1,022,628		1,045,429

F F C Holding Corporation
A leading U.S. manufacturer of private label frozen novelty and ice cream products.
Limited Liability Company Unit Preferred (B)	171 uts.			09/27/10		58,345		74,274
Limited Liability Company Unit Common (B)	171 uts.			09/27/10		17,073		103,298
						75,418		177,572

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.
Limited Liability Company Unit Preferred (B)	80,559 uts.			04/15/14		—		80,559
Limited Liability Company Unit Class B-1 (B)	65,789 uts.			12/15/10		65,789		148,450
Limited Liability Company Unit Class B-2 (B)	8,248 uts.			12/15/10		8,248		18,611
Limited Liability Company Unit Class B-3 (B)	6,522 uts.			08/30/12		15,000		16,412
Limited Liability Company Unit Class C (B)	1,575 uts.			12/20/10		16,009		29,928
						105,046		293,960


FMH Holdings Corporation
A designer and manufacturer of highly engineered components for the aerospace, defense and space industries.
11.5% Senior Subordinated Note due 11/01/2020		$	1,443,937	05/01/15		1,418,988		1,472,816
Common Stock (B)	148 shs.			05/01/15		148,096		237,069
						1,567,084		1,709,885

G C Holdings
A leading manufacturer of gaming tickets, industrial recording charts, security-enabled point-of sale receipts, and medical charts and supplies.
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	198 shs.			10/19/10		46,958		118,252

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

GD Dental Services LLC
A provider of convenient "onestop" general, specialty, and cosmetic dental services with 21 offices located throughout South and Central Florida.
Limited Liability Company Unit Preferred (B)	76 uts.		10/05/12	$	75,920	$	95,000
Limited Liability Company Unit Common (B)	767 uts.		10/05/12		767		50,627
					76,687		145,627

GenNx Novel Holding, Inc.
A manufacturer and distributor of nutraceutical ingredients.
13% Senior Subordinated Note due 03/27/2020	$	1,597,905	03/27/14		1,574,475		1,517,913
Common Stock (B)	15,500 shs.		03/27/14		155,000		114,705
					1,729,475		1,632,618

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 03/27/2019	$	1,201,902	03/27/13		1,188,258		1,174,208
Common Stock (B)	1,181 shs.		03/27/13		118,110		114,538
					1,306,368		1,288,746

Glynlyon Holding Companies, Inc.
A technology-enabled curriculum provider of K-12 and support services predominantly to small and medium public school districts.
12% Senior Subordinated Note due 01/05/2022	$	1,580,894	01/15/16		1,550,105		1,613,977
Common Stock (B)	147 shs.		01/15/16		147,436		124,227
					1,697,541		1,738,204

GlynnDevins Acquisition Corporation
A marketing communications agency that services senior living facilities.
13% Senior Subordinated Note due 12/19/2020	$	792,816	06/19/15		778,766		797,533
Preferred Stock Series A (B)	342 shs.		06/19/15		70,683		73,696
Common Stock (B)	342 shs.		06/19/15		2,945		1,009
					852,394		872,238

Grakon Parent
The leading designer and manufacturer of highly-engineered and customized LED and incandescent lighting systems for transportation-based markets.
Common Stock (B)	175 shs.		10/31/14		174,831		237,488

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
GTI Holding Company
A designer, developer, and marketer of precision specialty hand tools and handheld test instruments.
12% Senior Subordinated Note due 02/05/2020	$	727,865	02/05/14	$	690,354	$	691,317
Common Stock (B)	846 shs.		02/05/14		84,636		64,752
Warrant, exercisable until 2024, to purchase common stock at $.01 per share (B)	397 shs.		02/05/14		36,816		30,386
					811,806		786,455

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 06/19/2021	$	1,437,500	12/19/14		1,412,766		1,425,973
Limited Liability Company Unit Preferred (B)	288 uts.		12/19/14		287,500		213,849
Limited Liability Company Unit Common Class A (B)	2,875 uts.		12/19/14		—		—
					1,700,266		1,639,822

Hartland Controls Holding Corporation
A manufacturer and distributor of electronic and electromechanical components.
14% Senior Subordinated Note due 08/14/2019	$	1,089,948	02/14/14		1,074,628		1,100,847
12% Senior Subordinated Note due 08/14/2019	$	431,250	06/22/15		427,602		434,453
Preferred Stock Series A (B)	1,208 shs.		02/14/14		114,011		127,293
Common Stock (B)	821 shs.		02/14/14		822		97,021
					1,617,063		1,759,614

Healthcare Direct Holding Company
A direct-to-customer marketer of discount dental plans.
Common Stock (B)	517 shs.		03/09/12		51,724		100,711


HHI Group, LLC
A developer, marketer, and distributor of hobby-grade radio control products.
14% Senior Subordinated Note due 01/17/2020	$	1,615,730	01/17/14		1,593,578		1,402,912
Limited Liability Company Unit (B)	102 uts.		01/17/14		101,563		5,945
					1,695,141		1,408,857

Hi-Rel Group LLC
A manufacturer and distributor of precision metal piece parts for the microelectronic packaging industry, serving the aerospace/defense, telecommunications, and medical end markets.
12% Senior Subordinated Note due 03/15/2018	$	703,125	04/15/13		680,380		702,643
Limited Liability Company Unit (B)	234 uts.		04/15/13		234,375		331,590
Warrant, exercisable until 2020, to purchase common stock at $.01 per share (B)	37,177 shs.		04/15/13		32,344		65,743
					947,099		1,099,976

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Hollandia Produce LLC
A hydroponic greenhouse producer of branded root vegetables.
13.75% Senior Subordinated Note due 03/31/2021		$	1,302,743	12/30/15	$	1,277,820	$	1,329,624


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 08/19/2016		$	1,098,837	08/19/08		1,091,124		1,080,965
Common Stock (B)	251 shs.			08/19/08		251,163		35,203
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	65 shs.			08/19/08		60,233		9,099
						1,402,520		1,125,267

HVAC Holdings, Inc.
A provider of integrated energy efficiency services and maintenance programs for HVAC systems.
12.5% Senior Subordinated Note due 09/27/2019		$	1,202,372	09/27/12		1,188,211		1,202,372
Limited Liability Company Unit Class A Preferred (B)	1,127 uts.			09/27/12		112,726		157,222
Limited Liability Company Unit Class A Common (B)	910 uts.			09/27/12		910		54,474
						1,301,847		1,414,068


Ideal Tridon Holdings, Inc.
A designer and manufacturer of clamps and couplings used in automotive and industrial end markets.
Common Stock	93 shs.			10/27/11		77,462		158,300


Impact Confections
An independent manufacturer and marketer of confectionery products including Warheads^® brand sour candies, Melster^® brand classic candies, and co-manufactured/private label classic candies.
13% Senior Subordinated Note due 11/10/2020		$	1,078,639	11/10/14		1,060,918		1,084,575
Common Stock (B)	2,300 shs.			11/10/14		230,000		187,964
						1,290,918		1,272,539

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		148,162

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(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.
Preferred Stock A (B)	165 shs.			12/20/10		$	165,000	$	307,744
Preferred Stock B (B)	0.06 shs.			12/20/10			—		112
Common Stock	33 shs.			12/20/10			1,667		63,459
Warrant, exercisable until 2020, to purchase common stock at $.01 per share (B)	12 shs.			12/20/10			105,643		115,665
							272,310		486,980

Janus Group Holdings LLC
A manufacturer of roll-up doors and hallway systems that are primarily used in self-storage facilities.
13.5% Senior Subordinated Note due 06/10/2019		$	1,107,473	12/11/13			1,092,634		1,118,547
Limited Liability Company Unit Class A (B)	283 uts.			12/11/13			611,794		981,887
							1,704,428		2,100,434

JMH Investors LLC
A developer and manufacturer of custom formulations for a wide variety of foods.
14.25% Senior Subordinated Note due 12/05/2019		$	1,112,525	12/05/12			1,099,143		967,167
Limited Liability Company Unit (B)	1,038,805 uts.			12/05/12			232,207		13,575
							1,331,350		980,742


K & N Parent, Inc.
A manufacturer and supplier of automotive aftermarket performance air filters and intake systems.
Preferred Stock Series A	102 shs.			12/23/11			—		—
Preferred Stock Series B	29 shs.			12/23/11			—		—
Common Stock	163 shs.				*		6,522		163,612
* 12/23/11 and 06/30/14.							6,522		163,612


K N B Holdings Corporation
A designer, manufacturer and marketer of products for the custom framing market.
Common Stock (B)	71,053 shs.			05/24/06			71,053		79,379
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	43,600 shs.			05/25/06			37,871		48,709
							108,924		128,088

K P I Holdings, Inc.
The largest player in the U.S. non-automotive, non-ferrous die casting segment.
Limited Liability Company Unit Class C Preferred (B)	40 uts.			06/30/15			—		73,350
Common Stock (B)	353 shs.			07/15/08			285,619		413,634
							285,619		486,984

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value
Kyjen Company
A designer and distributer of branded and private label dog toys and accessories primarily in the US.
13% Senior Subordinated Note due 10/14/2021	$	1,299,722	10/14/15		$	1,275,206	$	1,312,493


Mail Communications Group, Inc.
A provider of mail processing and handling services, lettershop services, and commercial printing services.
Limited Liability Company Unit	12,764 uts.			*		166,481		163,412
Warrant, exercisable until 2017, to purchase common stock at $.01 per share (B)	1,787 shs.		05/04/07			22,781		22,879
* 05/04/07 and 01/02/08.						189,262		186,291

Manhattan Beachwear Holding Company
A designer and distributor of women's swimwear.
12.5% Senior Subordinated Note due 01/15/2018	$	419,971	01/15/10			401,962		401,984
15% Senior Subordinated Note due 01/15/2018	$	117,427	10/05/10			116,688		108,343
Common Stock (B)	35 shs.		10/05/10			35,400		3,941
Common Stock Class B (B)	118 shs.		01/15/10			117,647		13,098
Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B)	104 shs.		10/05/10			94,579		11,591
						766,276		538,957


Master Cutlery LLC
A designer and marketer of a wide assortment of knives and swords.
13% Senior Subordinated Note due 04/17/2020	$	879,203	04/17/15			870,143		852,635
Limited Liability Company Unit	5 uts.		04/17/15			678,329		346,292
						1,548,472		1,198,927

MC Sign Holdings LLC
A provider of sign and lighting services nationwide.
11.75% Senior Subordinated Note due 09/15/2021	$	763,999	09/22/15			749,728		772,018
Limited Liability Company Unit Class B (B)	101,500 uts.		09/22/15			101,500		99,683
						851,228		871,701

MedSystems Holdings LLC
A manufacturer of enteral feeding products, such as feeding tubes and other products related to assisted feeding.
Preferred Unit (B)	66 uts.		08/29/08			46,152		101,852
Common Unit Class A (B)	671 uts.		08/29/08			671		287,766
Common Unit Class B (B)	263 uts.		08/29/08			63,564		112,889
						110,387		502,507

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
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.
16% Senior Subordinated Note due 10/30/2019		$	454,295	09/22/11	$	449,013	$	441,236
15% Senior Subordinated Note due 04/30/2022		$	23,839	08/18/15		23,839		21,455
Limited Liability Company Unit Series A (B)	228 uts.			05/07/14		14,760		2,476
Limited Liability Company Unit Series B (B)	155,945 uts.			09/22/11		155,945		34,185
Common Stock Class A (B)	1,859 shs.			08/18/15		—		20,183
						643,557		519,535

MES Partners, Inc.
An industrial service business offering an array of cleaning and environmental services to the Gulf Coast region of the U.S.
12% Senior Subordinated Note due 09/30/2021		$	1,098,377	09/30/14		1,079,965		1,115,166
Common Stock Class B (B)	219,545 shs.			09/30/14		219,545		174,959
						1,299,510		1,290,125

MNX Holding Company
An international third party logistics company providing customized logistics services to customers across the globe.
14% Senior Subordinated Note due 11/02/2019		$	1,290,315	11/02/12		1,275,065		1,290,315
Common Stock (B)	45 shs.			11/02/12		44,643		48,434
						1,319,708		1,338,749

Money Mailer
A leading provider of hyperlocal shared direct mail advertising as well as interactive and online advertising solutions through its nationwide production and distribution network.
Preferred Stock	1,332,865 shs.			12/10/14		1,312,872		1,332,865


Motion Controls Holdings
A manufacturer of high performance mechanical motion control and linkage products.
14.25% Senior Subordinated Note due 08/15/2020		$	996,103	11/30/10		987,800		996,103
Limited Liability Company Unit Class B-1 (B)	75,000 uts.			11/30/10		—		86,344
Limited Liability Company Unit Class B-2 (B)	6,801 uts.			11/30/10		—		7,830
						987,800		1,090,277


NABCO, Inc.
A producer of explosive containment vessels in the United States.
Common Stock (B)	429 shs.			12/20/12		306,091		58,845

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or 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.
12% Senior Subordinated Note due 06/10/2020	$	810,000	02/02/07		$	809,408	$	377,530
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		—
Limited Liability Company Unit Class D-2 of Saw Mill PCG Partners LLC (B)	68 uts.		04/29/11			34,547		43,528
Limited Liability Company Unit Class D-3 of Saw Mill PCG Partners LLC (B)	104 uts.		12/10/14			103,904		105,251
* 12/18/08 and 09/30/09.						1,665,969		526,309



Northwest Mailing Services, Inc.
A producer of promotional materials for companies that use direct mail as part of their customer retention and loyalty programs.
Limited Partnership Interest (B)	1,740 uts.			*		174,006		196,723
Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B)	2,605 shs.			*		260,479		294,485
* 07/09/09 and 08/09/10.						434,485		491,208


O E C Holding Corporation
A provider of elevator maintenance, repair and modernization services.
Preferred Stock Series A (B)	554 shs.		06/04/10			55,354		82,562
Preferred Stock Series B (B)	311 shs.		06/04/10			31,125		53,003
Common Stock (B)	344 shs.		06/04/10			344		21,034
						86,823		156,599

PANOS Brands LLC
A marketer and distributor of branded consumer foods in the specialty, natural, better-for-you,"free from" healthy and gluten-free categories.
12% Senior Subordinated Note due 07/29/2021	$	1,451,496	01/29/16			1,423,161		1,481,858
Common Stock Class A (B)	276,000 shs.		01/29/16			276,000		276,000
						1,699,161		1,757,858

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or 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	$	1,235,800
Preferred Stock Series B (B)	7,059 shs.			05/22/09		290,050		92,224
Common Stock (B)	21,462 shs.			05/22/09		993,816		—
						1,342,900		1,328,024

Petroplex Inv Holdings LLC
A leading provider of acidizing services to E&P customers in the Permian Basin.
Limited Liability Company Unit	156,250 uts.			11/29/12		156,250		—


Polytex Holdings LLC
A manufacturer of water based inks and related products serving primarily the wall covering market.
13% Senior Subordinated Note due 01/31/2020		$	1,054,074	07/31/14		1,038,131		1,018,934
Limited Liability Company Unit	148,096 uts.			07/31/14		148,096		113,086
						1,186,227		1,132,020


Power Stop Holdings LLC
A supplier of performance upgrade aftermarket brake products.
11% Senior Subordinated Note due 05/29/2022		$	1,610,100	05/29/15		1,581,495		1,641,154
Limited Liability Company Unit Preferred (B)	1,149 uts.			05/29/15		114,900		121,824
Limited Liability Company Unit Common (B)	1,149 uts.			05/29/15		—		47,015
						1,696,395		1,809,993

PPC Event Services
A special event equipment rental business.
14% Senior Subordinated Note due 05/20/2020		$	1,149,563	11/20/14		1,131,319		1,172,554
Limited Liability Company Unit (B)	3,450 uts.			11/20/14		172,500		388,125
Limited Liability Company Unit Series A-1 (B)	339 uts.			03/16/16		42,419		42,419
						1,346,238		1,603,098

Randy's Worldwide Automotive
A designer and distributor of automotive aftermarket parts.
11.5% Senior Subordinated Note due 05/12/2021		$	1,135,898	05/12/15		1,116,226		1,137,637
Common Stock (B)	118 shs.			05/12/15		118,476		134,480
						1,234,702		1,272,117

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or 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.
Limited Liability Company Unit Class A (B)	13,548 uts.			*	$	135,477	$	223,708
* 10/21/11 and 08/03/12.

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.
Preferred Stock (B)	2,098 shs.		03/30/12			83,920		118,102
Common Stock (B)	983 shs.		03/30/12			9,830		154,113
						93,750		272,215

Signature Systems Holding Company
A seller and installer of a variety of modular surfaces, industrial matting and related products used for ground protection.
Common Stock (B)	76 shs.		03/15/13			75,509		121,134
Warrant, exercisable until 2023, to purchase common stock A at $.01 per share (B)	31 shs.		03/15/13			28,316		49,490
						103,825		170,624


Smart Source Holdings LLC
A short-term computer rental company.
Limited Liability Company Unit (B)	328 uts.			*		261,262		354,597
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	83 shs.			*		67,467		89,820
* 08/31/07 and 03/06/08.						328,729		444,417


SMB Machinery Holdings, Inc.
A reseller of used, rebuilt and refurbished packaging and processing equipment, primarily serving the bottling and food manufacturing industries.
14% Senior Subordinated Note due 10/18/2019 (D)	$	738,694	10/18/13			726,147		—
Common Stock (B)	841 shs.		10/18/13			84,100		—
						810,247		—

Strahman Holdings Inc
A manufacturer of industrial valves and wash down equipment for a variety of industries, including chemical, petrochemical, polymer, pharmaceutical, food processing, beverage and mining.
14% Senior Subordinated Note due 06/13/2019	$	1,059,783	12/13/13			1,043,394		1,070,381
Preferred Stock Series A (B)	158,967 shs.		12/13/13			158,967		284,551
Preferred Stock Series A-2 (B)	26,543 shs.		09/10/15			29,994		47,512
						1,232,355		1,402,444

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value
Sunrise Windows Holding Company
A manufacturer and marketer of premium vinyl windows exclusively selling to the residential remodeling and replacement market.
16% Senior Subordinated Note due 12/14/2017	$	1,217,936		*	$	1,243,795	$	1,140,476
Common Stock (B)	38 shs.		12/14/10			38,168		24,684
Warrant, exercisable until 2020, to purchase common stock at $.01 per share (B)	37 shs.		12/14/10			37,249		24,089
* 12/14/10, 08/17/12 and 03/31/16.						1,319,212		1,189,249


Sunvair Aerospace Group Inc.
An aerospace maintenance, repair, and overhaul provider servicing landing gears on narrow body aircraft.
12% Senior Subordinated Note due 07/31/2021	$	1,215,600	07/31/15			1,193,491		1,225,118
Common Stock (B)	68 shs.		07/31/15			78,150		73,811
						1,271,641		1,298,929


Synteract Holdings Corporation
A provider of outsourced clinical trial management services to pharmaceutical and biotechnology companies.
14% Senior Subordinated Note due 02/26/2019	$	2,330,583	09/02/08			2,290,332		2,330,583
Preferred Stock Series D (B)	257 shs.		02/27/13			25,678		—
Redeemable Preferred Stock Series A (B)	678 shs.		10/03/08			6,630		—
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	6,778 shs.		09/02/08			59,661		—
						2,382,301		2,330,583

Team Drive-Away Holdings LLC
An asset-light provider of over the road driveaway services for class 8 trucks and specialized equipment.
12.5% Senior Subordinated Note due 04/15/2021	$	766,700	10/15/15			752,284		774,978
Limited Liability Company Unit (B)	95,800 uts.		10/15/15			95,800		94,363
						848,084		869,341

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.
3% Senior Subordinated Note due 12/31/2018 (D)	$	770,572	12/05/13			—		732,043
15% Senior Subordinated Note due 12/05/2020 (D)	$	46,798	12/05/13			219,203		44,458
Warrant, exercisable until 2023, to purchase common stock at $.01 per share (B)	28,079 shs.		12/05/13			—		562
						219,203		777,063

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value
Transpac Holding Company
A designer, importer, and wholesaler of home décor and seasonal gift products.
8% Senior Subordinated Note due 10/31/2016 (D)	$	938,651	10/31/07		$	909,276	$	—
Common Stock (B)	110 shs.		10/31/07			110,430		—
Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B)	50 shs.		10/31/07			46,380		—
						1,066,086		—

Tranzonic Holdings LLC
A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom supplies and sanitary care products.
14% Senior Subordinated Note due 07/05/2019	$	1,560,154	07/05/13			1,541,057		1,560,154
Limited Liability Company Unit Preferred Class A (B)	147,727 shs.		07/05/13			147,727		201,927
						1,688,784		1,762,081


Tristar Global Energy Solutions, Inc.
A hydrocarbon and decontamination services provider serving refineries worldwide.
12.5% Senior Subordinated Note due 07/31/2020	$	1,130,623	01/23/15			1,111,627		1,042,460


Veritext Corporation
A provider of stenographic staffing and other services used during the legal deposition process.
10.75% Second Lien Term Loan due 01/29/2023	$	1,725,000	01/21/16			1,691,350		1,694,244


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		129,358
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		129,358


VP Holding Company
A provider of school transportation services for special-needs and homeless children in Massachusetts.
Common Stock (B)	3,632 shs.		03/31/14			363,158		566,538


Wellborn Forest Holding Company
A manufacturer of semi-custom kitchen and bath cabinetry.
8% Senior Subordinated Note due 09/30/2017 (D)	$	1,680,931	11/30/06			867,531		1,260,698
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		1,260,698

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Westminster Acquisition LLC
A manufacturer of premium, all-natural oyster cracker products sold under the Westminster and Olde Cape Cod brands.
12% Senior Subordinated Note due 02/03/2021	$	372,684	08/03/15	$	366,021	$	374,451
Limited Liability Company Unit (B)	370,241 uts.		08/03/15		370,241		512,561
					736,262		887,012

Whitcraft Holdings, Inc.
A leading independent manufacturer of precision formed, machined, and fabricated flight-critical aerospace components.
Common Stock (B)	205 shs.		12/16/10		205,480		202,395
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	55 shs.		12/16/10		49,334		54,391
					254,814		256,786


Wolf-Gordon, Inc.
A designer and specialty distributor of wallcoverings and related building products, including textiles, paint, and writeable surfaces.
12.5% Senior Subordinated Note due 07/22/2021	$	1,572,691	01/22/16		1,542,092		1,591,546
Common Stock (B)	157 shs.		01/22/16		156,818		140,521
					1,698,910		1,732,067

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 06/12/2020	$	948,779	11/03/11		940,394		948,778
Common Stock	1,500 shs.		11/03/11		150,000		218,360
					1,090,394		1,167,138

York Wall Holding Company
A designer, manufacturer and marketer of wall covering products for both residential and commercial wall coverings.
12.5% Senior Subordinated Note due 03/04/2021	$	1,566,448	03/04/15		1,539,572		1,468,958
Common Stock (B)	1,835 shs.		03/04/15		183,500		106,429
					1,723,072		1,575,387


Total Private Placement Investments (E)				$	96,708,386	$	98,538,386

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

Rule 144A Securities - 13.72%:
Bonds - 13.72%
Amsted Industries		5.375%	09/15/24	$	240,000	$	240,000	$	230,700
ArcelorMittal		6.125	06/01/18		500,000		506,217		505,000
Belden Inc.		5.250	07/15/24		210,000		210,000		200,550
CCOH Safari, LLC		5.750	02/15/26		500,000		500,000		517,500
Cimpress N.V.		7.000	04/01/22		500,000		485,883		495,000
CITGO Petroleum Corporation		6.250	08/15/22		425,000		425,000		410,125
Consolidated Energy Finance S.A.		6.750	10/15/19		500,000		493,949		476,250
Constellium N.V.		7.875	04/01/21		373,000		373,000		372,675
Cornerstone Chemical Company		9.375	03/15/18		375,000		379,554		349,687
CTP Transportation Products, LLC		8.250	12/15/19		310,000		310,000		305,350
Dean Foods		6.500	03/15/23		329,000		329,000		338,459
Endo Finance LLC		5.375	01/31/23		500,000		490,881		476,250
Family Tree Escrow, LLC		5.750	03/01/23		156,000		156,000		165,360
First Data Corporation		5.000	01/15/24		406,000		406,000		406,508
Harron Communications, L.P.		9.125	04/01/20		250,000		267,725		261,407
HD Supply, Inc.		5.250	12/15/21		127,000		127,000		133,350
Hilcorp Energy Company		5.000	12/01/24		335,000		335,000		282,237
H.J. Heinz Company		4.875	02/15/25		209,000		209,000		230,247
HP Enterprise Company		4.900	10/15/25		500,000		498,624		514,583
International Wire Group		8.500	10/15/17		500,000		514,385		498,125
J.B. Poindexter Co., Inc.		9.000	04/01/22		500,000		500,000		523,750
Jupiter Resources Inc.		8.500	10/01/22		500,000		474,094		265,000
OPE KAG Finance Sub		7.875	07/31/23		500,000		522,804		498,750
LBC Tank Terminals Holding Netherlands B.V.		6.875	05/15/23		663,000		680,107		616,590
Mallinckrodt PLC		5.750	08/01/22		500,000		500,000		460,625
MEG Energy Corporation		6.375	01/30/23		500,000		500,000		295,000
Micron Technology, Inc.		5.250	08/01/23		494,000		494,000		403,845
Moog Inc.		5.250	12/01/22		500,000		503,637		500,625
MPLX LP		4.875	12/01/24		500,000		500,000		461,618
Nielsen Finance LLC		5.000	04/15/22		271,000		272,760		277,775
Numericable Group SA		4.875	05/15/19		240,000		240,000		238,800
Paragon Offshore plc. (D)		6.750	07/15/22		500,000		175,711		131,250
Penske Corporation		4.875	07/11/22		500,000		498,482		533,888
Prestige Brands Holdings, Inc.		5.375	12/15/21		650,000		650,000		658,125
Sabre GLBL, Inc.		5.375	04/15/23		500,000		494,528		513,125
Sabre GLBL, Inc.		5.250	11/15/23		122,000		122,000		124,123
Safway Group Holding LLC/Finance Corporation		7.000	05/15/18		250,000		250,000		250,625
Sinclair Broadcast Group, Inc.		5.875	03/15/26		204,000		204,000		208,845
Sirius XM Radio Inc.		5.875	10/01/20		445,000		445,000		464,958

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


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

TeamHealth Holdings Inc		7.250%	12/15/23	$	115,000	$	115,000	$	123,050
Topaz Marine S.A.		8.625	11/01/18		500,000		500,000		452,500
Unitymedia KabelBW GmbH		6.125	01/15/25		500,000		500,000		519,690
Univision Communications, Inc.		5.125	05/15/23		160,000		160,000		159,200
Univision Communications, Inc.		5.125	02/15/25		419,000		424,761		413,763
UPCB Finance IV Limited		5.375	01/15/25		208,000		208,000		210,600
Valeant Pharmaceuticals International		7.000	10/01/20		250,000		250,513		210,000
Virgin Media Secured Finance PLC		5.250	01/15/26		500,000		504,057		500,000
VRX Escrow Corp.		6.125	04/15/25		382,000		382,000		294,140
Welltec A/S		8.000	02/01/19		375,000		371,267		340,313
West Corporation		5.375	07/15/22		500,000		491,746		458,650
Western Digital Corporation		10.500	04/01/24		253,000		253,000		253,633
XPO Logistics, Inc.		7.875	09/01/19		451,000		464,200		466,785

Total Bonds							19,908,885		18,999,004

Common Stock - 0.00%
TherOX, Inc. (B)					26		—		—
Touchstone Health Partnership (B)					292		—		—

Total Common Stock							—		—


Total Rule 144A Securities							19,908,885		18,999,004


Total Corporate Restricted Securities						$	116,617,271	$	117,537,390

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Public Securities - 16.63%: (A)	Interest Rate		Maturity Date	Principal Amount		Cost		Market Value

Bank Loans - 0.27%
Aquilex Holdings LLC		5.000%	12/31/20	$	167,977	$	167,689	$	155,378
Seadrill Partners Finco, LLC		4.000	02/21/21		498,724		193,276		219,439

Total Bank Loans							360,965		374,817


Bonds - 16.36%
Accuride Corp		9.500	08/01/18		500,000		491,279		460,000
Alcoa, Inc.		6.150	08/15/20		600,000		618,482		624,000
Anglogold Holdings PLC		5.375	04/15/20		600,000		603,157		591,750
Anixter, Inc.		5.125	10/01/21		165,000		165,000		165,825
Antero Resources Corporation		5.375	11/01/21		395,000		395,000		365,375
Bank of America Corporation		4.000	04/01/24		500,000		498,443		524,480
Bonanza Creek Energy, Inc.		5.750	02/01/23		500,000		500,000		132,500
Brunswick Corporation		7.125	08/01/27		500,000		504,201		527,500
Calumet Specialty Products Partners L.P.		7.625	01/15/22		500,000		498,915		353,750
CCO Holdings Capital Corporation		5.750	01/15/24		500,000		485,478		520,625
Clearwater Paper Corporation		4.500	02/01/23		500,000		496,288		476,875
Commercial Metals Company		4.875	05/15/23		750,000		751,198		663,750
CVR Refining LLC		6.500	11/01/22		350,000		340,444		309,750
DaVita Healthcare Partners, Inc.		5.000	05/01/25		500,000		483,012		495,000
D.R. Horton, Inc.		4.000	02/15/20		500,000		500,000		515,000
Duke Realty Limited Partnership		3.875	10/15/22		500,000		502,779		509,824
EP Energy Corporation		9.375	05/01/20		406,000		176,679		204,776
Ferrellgas Partners, L.P.		8.625	06/15/20		650,000		650,725		601,250
Forum Energy Technologies		6.250	10/01/21		160,000		160,000		137,600
Frontier Communications Corporation		6.875	01/15/25		500,000		490,914		422,187
HealthSouth Corporation		7.750	09/15/22		203,000		203,330		211,569
Hertz Corporation		6.750	04/15/19		220,000		218,350		223,188
Hornbeck Offshore Services, Inc.		1.500	09/01/19		500,000		257,500		296,563
Hospital Corporation of America		5.375	02/01/25		100,000		101,691		101,094
Hospital Corporation of America		5.250	06/15/26		174,000		174,000		178,350
Icahn Enterprises L.P.		6.000	08/01/20		600,000		608,413		583,500
Jabil Circuit, Inc.		4.700	09/15/22		500,000		499,982		495,000
Kindred Healthcare, Inc.		8.750	01/15/23		500,000		500,000		478,750
Laboratory Corporation of America Holdings		3.600	02/01/25		500,000		499,293		506,161
Lamar Media Corp.		5.375	01/15/24		160,000		160,000		166,848
Lazard Group LLC		4.250	11/14/20		500,000		498,860		522,143
Lennar Corporation		4.500	11/15/19		250,000		250,402		260,000
Lennar Corporation		4.750	04/01/21		500,000		500,000		506,250
Lennar Corporation		4.750	11/15/22		375,000		370,707		375,937
Lifepoint Hospitals, Inc.		5.500	12/01/21		350,000		358,205		365,750

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Corporate Public Securities: (A) (Continued)	Interest Rate		Maturity Date	Shares or Principal Amount		Cost		Market Value
Masco Corporation		7.125%	03/15/20	$	350,000	$	349,999	$	402,937
MasTec, Inc.		4.875	03/15/23		500,000		491,906		428,750
Meritor, Inc.		6.750	06/15/21		1,000,000		1,000,000		927,500
Netflix, Inc.		5.500	02/15/22		299,000		299,000		313,035
NRG Energy, Inc.		6.250	07/15/22		500,000		500,000		465,000
Omnova Solutions, Inc.		7.875	11/01/18		450,000		454,121		445,500
Orbital ATK, Inc.		5.250	10/01/21		500,000		500,000		518,750
Perry Ellis International, Inc.		7.875	04/01/19		125,000		124,346		125,625
Precision Drilling Corporation		6.625	11/15/20		250,000		254,803		200,000
R.R. Donnelley & Sons Company		6.000	04/01/24		500,000		500,000		410,000
Sanchez Energy Corporation		6.125	01/15/23		500,000		350,384		270,000
Sprint Corporation		7.125	06/15/24		155,000		155,000		115,087
Sprint Nextel Corporation		6.000	12/01/16		500,000		502,093		496,875
Steelcase, Inc.		6.375	02/15/21		500,000		504,901		564,758
Suburban Propane Partners, L.P.		5.750	03/01/25		500,000		500,000		477,500
Time Warner Cable, Inc.		5.000	02/01/20		500,000		495,442		542,735
Tyson Foods, Inc.		4.500	06/15/22		500,000		511,266		547,819
Weatherford International		4.500	04/15/22		500,000		514,597		401,250
William Lyon Homes		7.000	08/15/22		500,000		500,000		480,000
WPX Energy, Inc.		5.250	09/15/24		425,000		425,000		295,375
Xerium Technologies, Inc.		8.875	06/15/18		416,000		426,703		343,200

Total Bonds							23,872,288		22,644,616


Common Stock - 0.00%
Nortek, Inc. (B)					100		1		4,829

Total Common Stock							1		4,829


Total Corporate Public Securities						$	24,233,254	$	23,024,262

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)


Short-Term Security:	Interest Rate		Maturity Date	Principal Amount		Cost		Market Value

Commercial Paper - 1.44%
Enterprise Products Operating, LLC		0.800%	04/04/16	$	2,000,000	$	1,999,867	$	1,999,867

Total Short-Term Security						$	1,999,867	$	1,999,867


Total Investments		102.97%				$	142,850,392	$	142,561,519


Other Assets		8.90							12,313,021

Liabilities		(11.87)							(16,431,320	)

Total Net Assets		100.00%						$	138,443,220

(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)	Security valued at fair value using methods determined in good faith by or under the direction of the Board of Trustees.

(D)	Defaulted security; interest not accrued.

(E)	Illiquid security. As of March 31, 2016 the values of these securities amounted to $98,538,386 or 71.18% of net assets.

PIK	- Payment-in-kind

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)

Industry Classification:	Fair Value/ Market Value

AEROSPACE & DEFENSE - 3.11%
FMH Holdings Corporation	$	1,709,885
Merex Holding Corporation		519,535
Orbital ATK, Inc.		518,750
Sunvair Aerospace Group Inc.		1,298,929
Whitcraft Holdings, Inc.		256,786
		4,303,885

AIRLINES - 0.34%
XPO Logistics, Inc.		466,785

AUTOMOTIVE - 8.36%
Accuride Corp		460,000
Aurora Parts & Accessories LLC		1,734,795
CG Holdings Manufacturing Company		1,740,406
DPL Holding Corporation		1,719,821
Grakon Parent		237,488
J A C Holding Enterprises, Inc.		486,980
J.B. Poindexter Co., Inc.		523,750
K & N Parent, Inc.		163,612
Meritor, Inc.		927,500
Moog Inc.		500,625
Power Stop Holdings LLC		1,809,993
Randy's Worldwide Automotive		1,272,117
		11,577,087

BANKING - 0.38%
Bank of America Corporation		524,480

BROKERAGE, ASSET MANAGERS & EXCHANGES - 0.80%
Icahn Enterprises L.P.		583,500
Lazard Group LLC		522,143
		1,105,643

BUILDING MATERIALS - 8.15%
ARI Holding Corporation		2,323,155
Janus Group Holdings LLC		2,100,434
Masco Corporation		402,937
Nortek, Inc.		4,829
Pearlman Enterprises, Inc.		1,328,024
Signature Systems Holding Company		170,624
Sunrise Windows Holding Company		1,189,249
Torrent Group Holdings, Inc.		777,063
Wellborn Forest Holding Company		1,260,698
Wolf - Gordon, Inc.		1,732,067
		11,289,080

	Fair Value/ Market Value

CABLE & SATELLITE - 2.39%
CCO Holdings Capital Corporation	$	520,625
CCOH Safari, LLC		517,500
Harron Communications, L.P.		261,407
Numericable Group SA		238,800
Time Warner Cable, Inc.		542,735
Unitymedia KabelBW GmbH		519,690
UPCB Finance IV Limited		210,600
Virgin Media Secured Finance PLC		500,000
		3,311,357

CHEMICALS - 3.45%
Compass Chemical International LLC		1,763,383
Consolidated Energy Finance S.A.		476,250
Cornerstone Chemical Company		349,687
LBC Tank Terminals Holding Netherlands B.V.		616,590
Omnova Solutions, Inc.		445,500
Polytex Holdings LLC		1,132,020
		4,783,430

CONSTRUCTION MACHINERY - 0.49%
A W X Holdings Corporation		405,300
Safety Infrastructure Solutions		272,215
		677,515

CONSUMER CYCLICAL SERVICES - 2.74%
CHG Alternative Education Holding Company		1,055,721
Church Services Holding Company		175,046
Cimpress N.V.		495,000
PPC Event Services		1,603,098
West Corporation		458,650
		3,787,515

CONSUMER PRODUCTS - 10.40%
AMS Holding LLC		331,345
Animal Supply Company		1,670,894
Blue Wave Products, Inc.		785,534
gloProfessional Holdings, Inc.		1,288,746
GTI Holding Company		786,455

See Notes to Consolidated Financial Statements

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value

Handi Quilter Holding Company	$	1,639,822
HHI Group, LLC		1,408,857
HP Enterprise Company		514,583
K N B Holdings Corporation		128,088
Kyjen Company		1,312,493
Manhattan Beachwear Holding Company		538,957
MasTec, Inc.		428,750
Master Cutlery LLC		1,198,927
Perry Ellis International, Inc.		125,625
Prestige Brands Holdings, Inc.		658,125
Transpac Holding Company		—
York Wall Holding Company		1,575,387
		14,392,588

DIVERSIFIED MANUFACTURING - 6.00%
ABC Industries, Inc.		453,408
Advanced Manufacturing Enterprises LLC		7,777
Airxcel Holdings		1,783,688
Amsted Industries		230,700
Belden Inc.		200,550
BP SCI LLC		378,928
CTP Transportation Products, LLC		305,350
Custom Engineered Wheels, Inc.		666,857
F G I Equity LLC		293,960
Forum Energy Technologies		137,600
G C Holdings		118,252
Ideal Tridon Holdings, Inc.		158,300
K P I Holdings, Inc.		486,984
Motion Controls Holdings		1,090,277
NABCO, Inc.		58,845
NetShape Technologies, Inc.		526,309
Strahman Holdings Inc		1,402,444
		8,300,229

ELECTRIC - 0.34%
NRG Energy, Inc.		465,000

FINANCIAL OTHER - 0.11%
Insurance Claims Management, Inc.		148,162

FOOD & BEVERAGE - 10.18%
1492 Acquisition LLC		937,541
Dean Foods		338,459
Eagle Family Foods, Inc.		1,702,730

	Fair Value/ Market Value

F F C Holding Corporation	$	177,572
GenNx Novel Holding, Inc.		1,632,618
H.J. Heinz Company		230,247
Hollandia Produce LLC		1,329,624
Hospitality Mints Holding Company		1,125,267
Impact Confections		1,272,539
JMH Investors LLC		980,742
PANOS Brands LLC		1,757,858
Tyson Foods, Inc.		547,819
Westminster Acquisition LLC		887,012
WP Supply Holding Corporation		1,167,138
		14,087,166

GAMING - 1.26%
CTM Holding, Inc.		1,739,109

HEALTHCARE - 5.39%
DaVita Healthcare Partners, Inc.		495,000
ECG Consulting Group		1,417,769
GD Dental Services LLC		145,627
Healthcare Direct Holding Company		100,711
HealthSouth Corporation		211,569
Hospital Corporation of America		279,444
Kindred Healthcare, Inc.		478,750
Laboratory Corporation of America Holdings		506,161
Lifepoint Hospitals, Inc.		365,750
MedSystems Holdings LLC		502,507
Synteract Holdings Corporation		2,330,583
TeamHealth Holdings Inc		123,050
TherOX, Inc.		—
Touchstone Health Partnership		—
Valeant Pharmaceuticals International		210,000
VRX Escrow Corp.		294,140
		7,461,061

HOME CONSTRUCTION - 1.54%
D.R. Horton, Inc.		515,000
Lennar Corporation		1,142,187
William Lyon Homes		480,000
		2,137,187

INDEPENDENT - 1.16%
Antero Resources Corporation		365,375

See Notes to Consolidated Financial Statements

Babson Capital Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value

EP Energy Corporation	$	204,776
Jupiter Resources Inc.		265,000
MEG Energy Corporation		295,000
Precision Drilling Corporation		200,000
Sanchez Energy Corporation		270,000
		1,600,151

INDUSTRIAL OTHER - 10.07%
Advanced Technologies Holdings		348,639
AFC-Dell Holding Corporation		1,330,059
Aquilex Holdings LLC		155,378
Brunswick Corporation		527,500
Clough, Harbour and Associates		672,523
Connecticut Electric, Inc.		1,135,230
Hartland Controls Holding Corporation		1,759,614
Hi-Rel Group LLC		1,099,976
HVAC Holdings, Inc.		1,414,068
International Wire Group		498,125
Mail Communications Group, Inc.		186,291
MC Sign Holdings LLC		871,701
Nielsen Finance LLC		277,775
Northwest Mailing Services, Inc.		491,208
O E C Holding Corporation		156,599
Safway Group Holding LLC/Finance Corporation		250,625
Smart Source Holdings LLC		444,417
SMB Machinery Holdings, Inc.		—
Steelcase, Inc.		564,758
Tranzonic Holdings LLC		1,762,081
		13,946,567

MEDIA & ENTERTAINMENT - 4.33%
BlueSpire Holding, Inc.		1,656,641
GlynnDevins Acquisition Corporation		872,238
HOP Entertainment LLC		—
Lamar Media Corp.		166,848
Money Mailer		1,332,865
Netflix, Inc.		313,035
R.R. Donnelley & Sons Company		410,000
Sinclair Broadcast Group, Inc.		208,845
Sirius XM Radio Inc.		464,958
Univision Communications, Inc.		572,963
		5,998,393

	Fair Value/ Market Value

METALS & MINING - 1.99%
Alcoa, Inc.	$	624,000
Anglogold Holdings PLC		591,750
ArcelorMittal		505,000
Commercial Metals Company		663,750
Constellium N.V.		372,675
		2,757,175

MIDSTREAM - 1.00%
CVR Refining LLC		309,750
Ferrellgas Partners, L.P.		601,250
Suburban Propane Partners, L.P.		477,500
		1,388,500

OIL FIELD SERVICES - 3.19%
Avantech Testing Services LLC		—
Bonanza Creek Energy, Inc.		132,500
Enterprise Products Operating, LLC		1,999,867
Hilcorp Energy Company		282,237
Hornbeck Offshore Services, Inc.		296,563
Petroplex Inv Holdings LLC		—
Seadrill Partners Finco, LLC		219,439
Topaz Marine S.A.		452,500
Weatherford International		401,250
Welltec A/S		340,313
WPX Energy, Inc.		295,375
		4,420,044

OTHER-REITS - 0.37%
Duke Realty Limited Partnership		509,824

PACKAGING - 0.66%
ASC Holdings, Inc.		790,562
Vitex Packaging Group, Inc.		129,358
		919,920

PAPER - 1.23%
Clearwater Paper Corporation		476,875
Dunn Paper		885,158
Xerium Technologies, Inc.		343,200
		1,705,233

PHARMACEUTICALS - 2.66%
Clarion Brands Holding Corp.		1,705,273
Endo Finance LLC		476,250

See Notes to Consolidated Financial Statements

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2016

(Unaudited)

Industry Classification: (Continued)	Fair Value/ Market Value

ERG Holding Company LLC	$	1,045,429
Mallinckrodt PLC		460,625
		3,687,577

REFINING - 2.66%
Calumet Specialty Products Partners L.P.		353,750
CITGO Petroleum Corporation		410,125
MES Partners, Inc.		1,290,125
MPLX LP		461,618
Paragon Offshore plc.		131,250
Tristar Global Energy Solutions, Inc.		1,042,460
		3,689,328

RETAILERS - 0.22%
Family Tree Escrow, LLC		165,360
HD Supply, Inc.		133,350
		298,710

TECHNOLOGY - 4.35%
Anixter, Inc.		165,825
First Data Corporation		406,508
Glynlyon Holding Companies, Inc.		1,738,204
Jabil Circuit, Inc.		495,000
Micron Technology, Inc.		403,845
REVSpring, Inc.		223,708
Sabre GLBL, Inc.		637,248
Veritext Corporation		1,694,244
Western Digital Corporation		253,633
		6,018,215

	Fair Value/ Market Value

TRANSPORTATION SERVICES - 2.91%
Hertz Corporation	$	223,188
MNX Holding Company		1,338,749
OPE KAG Finance Sub		498,750
Penske Corporation		533,888
Team Drive-Away Holdings LLC		869,341
VP Holding Company		566,538
		4,030,454

WIRELESS - 0.44%
Sprint Corporation		115,087
Sprint Nextel Corporation		496,875
		611,962

WIRELINES - 0.30%
Frontier Communications Corporation		422,187

Total Investments - 102.97%	$	142,561,519

See Notes to Consolidated Financial Statements

Fair Value Hierarchy

The Trust 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, 2016:

Assets:	Total		Level 1		Level 2		Level 3
Restricted Securities
Corporate Bonds	$	93,568,417	$	—	$	18,999,004	$	74,569,413
Common Stock - U.S.		7,094,164		—		—		7,094,164
Preferred Stock		7,220,989		—		—		7,220,989
Partnerships and LLCs		9,653,820		—		—		9,653,820
Public Securities
Bank Loans		374,817		—		374,817		—
Corporate Bonds		22,644,616		—		22,644,616		—
Common Stock - U.S.		4,829		4,829		—		—
Short-term Securities		1,999,867		—		1,999,867		—
Total	$	142,561,519	$	4,829	$	44,018,304	$	98,538,386
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:


Assets:	Beginning balance at 12/31/2015		Included in earnings			Purchases		Sales			Prepayments			Transfers into Level 3		Transfers out of Level 3		Ending balance at 3/31/2016
Restricted Securities
Corporate Bonds	$	67,658,072	$	492,690		$	6,440,729	$	—		$	(22,078	)	$	—	$	—	$	74,569,413
Common Stock - U.S.		7,806,723		(751,915	)		580,254		(540,898	)		—			—		—		7,094,164
Preferred Stock		6,609,176		621,761			—		(9,948	)		—			—		—		7,220,989
Partnerships and LLCs		9,670,199		124,087			42,418		(182,884	)		—			—		—		9,653,820
	$	91,744,170	$	486,623		$	7,063,401	$	(733,730	)	$	(22,078	)	$	—	$	—	$	98,538,386
There were no transfers into or out of Level 1 and Level 2 assets.

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 27, 2016

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 27, 2016

By (Signature and Title)*

/s/ James M. Roy

James M. Roy, Vice President and

Chief Financial Officer

Date May 27, 2016

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