Company: PDCC
Filing Date: 2025-09-16
Form Type: N-2/A
Source: 0001214659-25-013826
Chunk: 58

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-16
Form: N-2/A
Chunk 58
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 it is difficult to predict whether the prices of assets underlying CLOs will rise or fall, these
prices (and, therefore, the prices of the CLOs’ securities) will be influenced by the same types of political and economic events
that affect issuers of securities and capital markets generally. The interests we intend to acquire in CLOs will likely be thinly traded
or have only a limited trading market. CLO securities are typically privately offered and sold, even in the secondary market. As a result,
investments in CLO equity securities are illiquid. See “Risks Related to Our Investments — The lack of liquidity in our investments may adversely affect our business.”

We and our investments are subject to risks associated with investing in high-yield and unrated, or “junk,” securities.

We invest primarily in securities that are not
rated by a national securities rating service. The primary assets underlying our CLO security investments are senior secured loans, although
these transactions may allow for limited exposure to other asset classes including unsecured loans and high yield bonds. CLOs generally
invest in lower-rated debt securities that are typically rated below Baa/BBB by Moody’s, S&P or Fitch. In addition, we may obtain
direct exposure to such financial assets or instruments. Securities that are not rated or are rated lower than Baa by Moody’s or
lower than BBB by S&P or Fitch are sometimes referred to as “high yield” or “junk.” High-yield debt securities
have greater credit and liquidity risk than investment grade obligations. High-yield debt securities and loans are generally unsecured
and may be subordinated to certain other obligations of the issuer thereof. The lower rating of high-yield debt securities and below-investment
grade loans reflects a greater possibility that adverse changes in the financial condition of an issuer, or in general economic conditions,
or both, may impair the ability of the issuer to make payments of principal or interest.

The CLO equity securities that we hold and intend
to acquire are typically unrated and are therefore considered speculative with respect to timely payment of interest and repayment of
principal. The collateral of underlying CLOs are also typically higher-yield, sub-investment grade investments. Investing in CLO equity
securities and other high-yield investments involves greater credit and liquidity risk than investment grade obligations, which may adversely
impact our performance.

A portion of the loans held by CLOs in which we
invest may consist of second lien loans.