Company: PDCC
Filing Date: 2025-09-03
Form Type: N-CSRS
Source: 0001398344-25-017467
Chunk: 3

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-03
Form: N-CSRS
Chunk 3
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 Q2 where only one position in our portfolio was refinanced or reset. Activity
has already accelerated in Q3, with five of our minority positions successfully reset or refinanced, thereby adding value to our holdings.
Even as minority equity holders, we continue to take an activist role, engaging directly with CLO managers to drive refinancing opportunities
at the liability level. During Q2 we did not allocate capital to the primary CLO market, instead focusing on acquiring attractive positions
in the secondary market. We continue to see a steady flow of compelling short- and medium-duration CLO equity in secondary space, often
with meaningful refinancing potential. Looking ahead, we expect the combination of selective secondary opportunities and renewed refinancing
activity to remain a strong driver of value across the portfolio.

Included within this report you will find detailed
portfolio information as well as certain look-through information related to the collateral characteristics of the Company’s investments
as of June 30, 2025.

Market Overview

The U.S. leveraged loan market in the first half of
2025 delivered a more measured pace of activity following last year’s record issuance which was driven largely by the volume of
repricing. Total institutional volume was $467 billion, compared to $734 billion in the first half of 2024. The fall in volume this year
is driven by a fall in repricing activity which moderated from the exceptional levels of 2024. Year-to-date repricing volume totals $214
billion year-to-date compared to $376 billion of repricing activity in the prior year. Another healthy sign has been the pick-up in new
net issuance, with non-refinancing activity reaching $127 billion in the first six months of 2025, compared to $110 billion over the same
period last year. Secondary loan prices saw a temporary dip in April amid tariff headlines but recovered strongly into June, ending the
first half just below year-end levels.

Loan defaults in the period remained low compared
to the historical average, though activity picked up slightly in June with Altice France entering restructuring, representing $7.65 billion
of loans across US and European indices. As a result, the trailing 12-month payment default rate by amount rose to 1.1% at the end of
June, up from 0.91% in December 2024, but still below the post pandemic peak of 1.75%. Distressed liability management exercises (“LMEs”)
continue to play a large role in reshaping