Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 58

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 58
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, financial institution or syndicate member (“intermediary bank”).
In a loan participation, the borrower will be deemed to be the issuer of the participation interest, except to the extent the CLO derives
rights from the intermediary bank. Because the intermediary bank does not guarantee a loan participation in any way, a loan participation
is subject to the credit risks generally associated with the underlying borrower. In the event of the bankruptcy or insolvency of the
borrower, a loan participation may be subject to certain defenses that can be asserted by such borrower as a result of improper conduct
by the intermediary bank. In addition, in the event the underlying borrower fails to pay principal and interest when due, the CLO, may
be subject to delays, expenses and risks that are greater than those that would have been involved if the CLO had purchased a direct obligation
of such borrower. Under the terms of a loan participation, the CLO may be regarded as a creditor of the intermediary bank (rather than
of the underlying borrower), so that the CLO may also be subject to the risk that the intermediary bank may become insolvent.

Loan assignments are investments in assignments
of all or a portion of certain loans from third parties. When a CLO in which we have invested, purchases assignments from lenders, it
will acquire direct rights against the borrower on the loan. Since assignments are arranged through private negotiations between potential
assignees and assignors, however, the rights and obligations acquired by a CLO in which we have invested, may differ from, and be more
limited than, those held by the assigning lender. Loan participations and assignments may be illiquid investments, which are subject to
the risk described below.

The lack of liquidity in our investments may adversely affect our business.

High-yield investments, including subordinated
CLO securities and collateral held by CLOs in which we invest, generally have limited liquidity. As a result, prices of high-yield investments
have at times experienced significant and rapid decline when a substantial number of holders (or a few holders of a significantly large
“block” of the securities) decided to sell. In addition, we (or the CLOs in which we invest) may have difficulty disposing
of certain high-yield investments because there may be a thin trading market for such securities. To the extent that a secondary trading
market for non-investment grade high-yield investments does exist, it would not be as liquid as the secondary market for highly rated
investments.