Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 90

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 90
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 the leveraged loan market generally
remains uncertain, and any negative impact on secondary market liquidity for securities comprising a CLO may be experienced due to the
effects of the Final U.S. Risk Retention Rules on market expectations or uncertainty, the relative appeal of other investments not impacted
by the Final U.S. Risk Retention Rules and other factors.

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In the European Union, there has also
been an increase in political and regulatory scrutiny of the securitization industry. Regulation EU 2017/2402 of the European Parliament
and the Council of 12 December 2017 laying down a general framework for securitization and creating a specific framework for simple, transparent
and standardized securitization (as may be amended from time to time and including any delegated or implementing legislation with respect
thereto, the “Securitization Regulation”) became effective on January 17, 2018 and applies to all new securitizations issued
on or after January 1, 2019. The Securitization Regulation repealed and replaced the prior EU risk retention requirements with a single
regime that applies to European credit institutions, investment firms, insurance and reinsurance companies, alternative investment fund
managers that manage and/or market their alternative investment funds in the EU, undertakings for collective investment in transferable
securities regulated pursuant to EU Directive 2009/65/EC and the management companies thereof and, subject to some exceptions, institutions
for occupational pension provision (“IORPs”), each as set out in the Securitization Regulation (such investors, “EU Affected Investors”).
Such EU Affected Investors may be subject to punitive capital requirements and/or other regulatory penalties with respect to investments
in securitizations that fail to comply with the Securitization Regulation.

The Securitization Regulation restricts
an EU Affected Investor from investing in securitizations unless, among other things: (a)(i) the originator, sponsor or original lender
with respect to the relevant securitization will retain, on an on-going basis, a net economic interest of not less than 5% with respect
to certain specified credit risk tranches or securitized exposures and (ii) the risk retention is disclosed to the investor in accordance
with the Securitization Regulation; and (b) such investor is able to demonstrate that it has undertaken certain due diligence with respect
to various matters, including the risk characteristics of