Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 38

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 38
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(“high yield”) equity and debt securities of CLOs. The CLO mezzanine debt and equity investments purchased by us will generally
represent the most junior parts of the capital structure of the CLO and will not be rated by any rating agency, or if rated, will be rated
below AA/Aa. While all of our CLO investments are subject to the risk of loss, our investments in mezzanine debt and equity CLO investments
will be subject to the greatest risk of loss and will be more directly affected by any losses or delays in payment on the related collateral.
We will invest in CLOs that are managed by various managers, and in some CLOs with underlying collateral consisting of static pools selected
by the related manager. The performance of any particular CLO will depend, among other things, on the level of defaults experienced on
the related collateral, as well as the timing of such defaults and the timing and amount of any recoveries on such defaulted collateral
and (except in the case of static pool CLOs) the impact of any trading of the related collateral. There can be no assurances that any
level of investment return will be achieved by investors. It is possible that our investments in the CLOs will result in a loss on an
aggregate basis (even if some investments do not suffer a loss) and therefore investors could incur a loss on their investment. Because
the payments on certain of our CLO investments (primarily, CLO mezzanine debt and equity investments) are subordinated to payments on
the senior obligations of the respective CLO, these investments represent subordinated, leveraged investments in the underlying collateral.
Therefore, changes in the value of these CLO investments are anticipated to be greater than the change in the value of the underlying
collateral, which themselves are subject to, among other things, credit, liquidity and interest rate risk, which are described below.
Moreover, our CLO mezzanine debt and equity investments will have different degrees of leverage based on the capital structure of the
CLO. Investors should consider with particular care the risks of the leverage present in our investments because, although the use of
leverage by a CLO creates an opportunity for substantial returns on the related investment, the subordination of such investment to the
senior debt securities issued by that CLO increases substantially the likelihood that we could lose our entire investment in such investment
if the underlying collateral is adversely affected by, among other things, the occurrence of