Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 64

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 64
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 in bankruptcy or other reorganization proceeding;
if our claim is unsecured, we will be treated as a general creditor of such prime broker or counterparty and will not have any claim with
respect to the underlying security. We may obtain only a limited recovery or may obtain no recovery in such circumstances. The counterparty
risk for cleared derivatives is generally lower than for uncleared OTC derivatives, since, generally, a clearing organization becomes
substituted for each counterparty to a cleared derivative and, in effect, guarantees the parties’ performance under the contract,
as each party to a trade looks only to the clearing house for performance of financial obligations. However, there can be no assurance
that the clearing house, or its members, will satisfy its obligations to us.

Correlation risk. When used
for hedging purposes, an imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying
investment sought to be hedged may prevent us from achieving the intended hedging effect or expose us to the risk of loss. The imperfect
correlation between the value of a derivative and our underlying assets may result in losses on the Derivative Transaction that are greater
than the gain in the value of the underlying assets in our portfolio. The Adviser may not hedge against a particular risk because it does
not regard the probability of the risk occurring to be sufficiently high as to justify the cost of the hedge, or because it does not foresee
the occurrence of the risk. These factors may have a significant negative effect on the fair value of our assets and the market value
of shares of our common stock.

Liquidity risk. Derivative Transactions,
especially when traded in large amounts, may not be liquid in all circumstances, so that in volatile markets we would not be able to close
out a position without incurring a loss. Although both OTC and exchange-traded derivatives markets may experience a lack of liquidity,
OTC non-standardized derivative transactions are generally less liquid than exchange-traded instruments. The illiquidity of the derivatives
markets may be due to various factors, including congestion, disorderly markets, limitations on deliverable supplies, the participation
of speculators, government regulation and intervention, and technical and operational or system failures. In addition, daily limits on
price fluctuations and speculative position limits on exchanges on which we may conduct transactions in derivative instruments may prevent
prompt liquidation of positions, subjecting us to the potential of greater losses.

Leverage risk. Trading in Derivative
Transactions can result