Company: PDCC
Filing Date: 2025-09-16
Form Type: N-2/A
Source: 0001214659-25-013826
Chunk: 222

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-16
Form: N-2/A
Chunk 222
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 party’s obligations are generally equal to only the net amount to be paid or received under
the agreement based on the relative values of the positions held by each party to the swap agreement.

A great deal of flexibility
is possible in the way swaps may be structured. For example, in a simple fixed-to-floating interest rate swap, one party makes payments
equivalent to a fixed interest rate, and the other party makes payments calculated with reference to a specified floating interest rate,
such as LIBOR or the prime rate. In a currency swap, the parties generally enter into an agreement to pay interest streams in one currency
based on a specified rate in exchange for receiving interest streams denominated in another currency. Currency swaps may involve initial
and final exchanges of the currency that correspond to the agreed upon notional amount. The use of currency swaps is a highly specialized
activity which involves special investment techniques and risks, including settlement risk, non-business day risk, the risk that trading
hours may not align, and the risk of market disruptions and restrictions due to government action or other factors.

The Company may engage in
simple or more complex swap transactions involving a wide variety of underlying assets for various reasons. For example, the Company may
enter into a swap (i) to gain exposure to investments (such as an index of securities in a market) or currencies without actually purchasing
those stocks or currencies; (ii) to make an investment without owning or taking physical custody of securities or currencies in circumstances
in which direct investment is restricted for legal reasons or is otherwise impracticable; (iii) to hedge an existing position; (iv) to
obtain a particular desired return at a lower cost to the Company than if it had invested directly in an instrument that yielded the desired
return; or (v) for various other reasons.

The Company may enter into
credit default swaps as a buyer or a seller. The buyer in a credit default contract is obligated to pay the seller a periodic stream of
payments over the term of the contract provided no event of default has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value (“par value”) of the underlying in exchange for the underlying. If the Company is a buyer and
no event of default occurs, the Company will have made a stream of payments to the seller without having benefited from the default protection
it purchased. However, if an event of default occurs, the Company, as a buyer, will receive the full notional value of the