Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 63

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 63
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 business and in which it holds assets, any of which may adversely
affect such issuer’s or borrower’s ability to make, or a creditor’s ability to enforce, payment in full, on a timely
basis or at all. These insolvency considerations will differ depending on the jurisdiction in which an issuer or borrower or the related
underlying assets are located and may differ depending on the legal status of the issuer or borrower.

We are subject to risks associated with any hedging or Derivative Transactions in which we participate.

We may in the future purchase and sell a variety
of derivative instruments. To the extent we engage in Derivative Transactions, we expect to do so to hedge against interest rate, currency
credit and/or other risks or for other risk management purposes. We may use Derivative Transactions for investment purposes to the extent
consistent with our investment objectives if the Adviser deems it appropriate to do so. Derivative Transactions may be volatile and involve
various risks different from, and in certain cases, greater than the risks presented by other instruments. The primary risks related to
Derivative Transactions include counterparty, correlation, illiquidity, leverage, volatility, and OTC trading risks. A small investment
in derivatives could have a large potential impact on our performance, imposing a form of investment leverage on our portfolio. In certain
types of Derivative Transactions, we could lose the entire amount of our investment. In other types of Derivative Transactions, the potential
loss is theoretically unlimited.

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The following is a more detailed discussion of
primary risk considerations related to the use of Derivative Transactions that investors should understand before investing in shares
of our common stock.

Counterparty risk. Counterparty
risk is the risk that a counterparty in a Derivative Transaction will be unable to honor its financial obligation to us, or the risk that
the reference entity in a credit default swap or similar derivative will not be able to honor its financial obligations. Certain participants
in the derivatives market, including larger financial institutions, have experienced significant financial hardship and deteriorating
credit conditions. If our counterparty to a Derivative Transaction experiences a loss of capital, or is perceived to lack adequate capital
or access to capital, it may experience margin calls or other regulatory requirements to increase equity. Under such circumstances, the
risk that a counterparty will be unable to honor its obligations may increase substantially. If a counterparty becomes bankrupt, we may
experience significant delays in obtaining recovery (if at all) under the derivative contract