Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 204

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 204
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 may be adjusted to
a higher amount by the Company's Futures Commission Merchant, as well as possible SEC- or CFTC-mandated margin requirements. With respect
to uncleared swaps, swap dealers are required to collect variation margin from the Company and may be required to collect initial margin
from the Company pursuant to the CFTC's or the Prudential Regulators' uncleared swap margin rules. Both initial and variation margin must
be in the form of eligible collateral, and may be composed of cash and/or securities, subject to applicable regulatory haircuts. These
rules also mandate that collateral in the form of initial margin be posted to cover potential future exposure attributable to uncleared
swap transactions for certain entities, which may include the Company. In the event the Company is required to post collateral in the
form of initial margin in respect of its uncleared swap transactions, all such collateral will be posted with a third-party custodian
pursuant to a triparty custody agreement between the Company, its dealer counterparty and an unaffiliated custodian.

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Although the Dodd-Frank Act
requires many OTC derivative transactions previously entered into on a principal-to-principal basis to be submitted for clearing by a
regulated clearinghouse, certain of the derivatives that may be traded by the Company may remain principal-to-principal or OTC contracts
between the Company and third parties. The risk of counterparty non-performance can be significant in the case of these OTC instruments,
and "bid-ask" spreads may be unusually wide in these markets. To the extent not mitigated by implementation of the Dodd-Frank
Act, if at all, the risks posed by such instruments and techniques, which can be complex, may include: (1) credit risks (the exposure
to the possibility of loss resulting from a counterparty's failure to meet its financial obligations), as further discussed below; (2)
market risk (adverse movements in the price of a financial asset or commodity); (3) legal risks (the characterization of a transaction
or a party's legal capacity to enter into it could render the transaction unenforceable, and the insolvency or bankruptcy of a counterparty
could pre-empt otherwise enforceable contract rights); (4) operational risk (inadequate controls, deficient procedures, human error, system
failure or fraud); (5) documentation risk (exposure to losses resulting from inadequate documentation); (6) liquidity risk (exposure to
losses created by inability