Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 56

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 56
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LO equity securities are illiquid. See “Risks Related to Our Investments — The lack of liquidity in our investments may adversely affect our business.”

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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. Second lien loans are secured by liens on the collateral securing the loan that are subordinated
to the liens of at least one other class of obligations of the related obligor. Thus, the ability of the CLO issuer to exercise remedies
after a second lien loan becomes a defaulted obligation is subordinated to, and limited by, the rights of the senior creditors holding
such other classes of obligations. In many circumstances, the CLO issuer may be prevented from foreclosing on the collateral securing
a second lien loan