Company: PDCC
Filing Date: 2025-09-16
Form Type: N-2/A
Source: 0001214659-25-013826
Chunk: 60

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-16
Form: N-2/A
Chunk 60
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 the extent it (or any investment
manager) is required to seek recovery upon a default on a high yield bond (or any other debt obligation) or participate in the restructuring
of such obligation.

We are subject to risks associated with loan assignments and participations.

The CLOs in which we invest will purchase loan
participations and assignments. Loan participations are interests in loans to obligors which are administered by the lending bank or agent
for a syndicate of lending banks, and sold by the lending bank, 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.

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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