Company: PDCC
Filing Date: 2025-09-19
Form Type: 424B2
Source: 0001214659-25-013974
Chunk: 126

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-19
Form: 424B2
Chunk 126
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75% of the demand for newly issued highly leveraged loans, according to S&P Capital IQ. Senior secured loans are floating rate
instruments, typically making quarterly interest payments based on a spread over a benchmark rate, which is generally currently the SOFR.
As floating rate instruments, they reduce some of the interest rate risk associated with fixed rate securities, especially in a period
of rising rates.

Senior secured loans are secured by a first priority
pledge of a company’s assets. Senior secured loans are protected by sitting at the top of a corporate capital structure and cushioned
by any subordinated debt or equity issued by the company. Senior secured loans are also prepayable and typically prepay on average 30%
per year, per LCD.

We believe that the attractive historical performance
of CLO securities is attributable, in part, to the relatively low historical average default rate and relatively high historical average
recovery rate on senior secured loans, which comprise the vast majority of most CLO portfolios.

A CLO’s indenture typically requires that
the maturity dates of a CLO’s assets (typically five to eight years from the date of issuance of a senior secured loan) be shorter
than the maturity date of the CLO’s liabilities (typically 12 to 13 years from the date of issuance). However, CLO investors do
face reinvestment risk with respect to a CLO’s underlying portfolio. See “Risk Factors — Risks Related to Our Investments — We and our investments are subject to reinvestment risk.”

Most CLOs generally allow for reinvestment over
a specific period of time (the “reinvestment period,” which is typically up to five years). Specifically, CLO collateral managers
may, based on their discretion and expertise, adjust a CLO’s portfolio over time, though such discretion is typically constrained
by asset eligibility and diversification criteria set out in the CLO’s indenture. We believe that skilled CLO collateral managers
can add significant value to both CLO debt and equity investors through a combination of their credit expertise and a strong understanding
of how to manage effectively within the rules-based structure of a CLO.

After the CLO’s reinvestment period has
ended, in accordance with the CLO’s principal waterfall, cash generated from principal payments or other proceeds are distributed
to repay CLO debt investors in order of seniority. That is, the AAA tranche investors are repaid first, the AA tranche investors second,
and so on, with any remaining principal being