Company: PDCC
Filing Date: 2025-09-16
Form Type: N-2/A
Source: 0001214659-25-013826
Chunk: 67

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-16
Form: N-2/A
Chunk 67
---
-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 in significant leverage and risk of loss. Thus, the leverage offered by trading in derivative instruments will
magnify the gains and losses we experience and could cause our NAV to be subject to wider fluctuations than would be the case if we did
not use the leverage feature in derivative instruments.

Volatility risk. The prices
of many derivative instruments, including many options and swaps, are highly volatile. Price movements of options contracts and payments
pursuant to swap agreements are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal,
monetary and exchange control programs and policies of governments, and national and international political and economic events and policies.
The value of options and swap agreements also depends upon the price of the securities or currencies underlying them.

| 43 |

OTC trading risk. Derivative
Transactions that may be purchased or sold may include instruments not traded on an organized market. The risk of non-performance by the
counterparty to such Derivative Transaction may be greater and the ease with which we can dispose of or enter into closing transactions
with respect to such an instrument may be less than in the case of an exchange traded instrument. In addition, significant disparities
may exist between “bid” and “ask” prices for certain derivative instruments that are not traded on an exchange.
Such instruments are often valued subjectively and may result in difficulties pricing or fair valuing the instrument. Improper valuations
can result in increased cash payment requirements to counterparties, or a loss of value, or both. In contrast, cleared derivative transactions
benefit from daily marked-to-market pricing and settlement, and segregation and minimum capital requirements applicable to intermediaries.
Transactions entered into directly between two counterparties generally do not benefit from such protections; however, certain uncleared
derivative transactions are subject to minimum margin requirements which may require us and our counterparties to exchange collateral
based on daily mark-to-market pricing. OTC trading generally exposes us to the risk that a