Derek B. Newman Division of Investment Management Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 |
| RE: | Guggenheim Credit Allocation Fund (File Nos. 333-198646, 811-22715) |
| Comment | The disclosure under “Use of Financial Leverage – Indebtedness” on page 62 provides that pursuant to the Fund’s Committed Facility Agreement with BNP Paribas, borrowings are collateralized by portfolio assets which are maintained by the Fund in a separate account with the Fund’s custodian for the benefit of the lender, and that such securities deposited in the collateral account may be rehypothecated by BNP Paribas. Please supplementally explain what “reasonable interest” the Fund receives in connection with such rehypothecation. Please also explain the accounting treatment of such rehypothecation. |
| Response | The Fund has not drawn any amounts under the Fund’s Committed Facility Agreement and therefore no pledged securities have been rehypothecated under the terms of the Committed facility Agreement. The Fund benefited from granting BNP Paribas the right to rehypothecate pledged securities by being able to negotiate more attractive terms than a committed facility in which rehypothecation would not be allowed. In addition, to the extent that securities are rehypothecated by BNP Paribas, the Fund receives rehypothecation fee, which represents a percentage of the revenue received by BNP Paribas from such rehypothecation. |
