Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 220

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 220
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 the Company would
calculate the obligations of the swap agreements’ counterparties on a “net basis.” Consequently, the Company’s
current obligation (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each counterparty to the swap agreement (the “net amount”).
The Company’s current obligation under a swap agreement will be accrued daily (offset against any amounts owed to the Company).

The swap market has grown
substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents using
standardized swap agreements. As a result, the use of swaps has become more prevalent in comparison with the markets for other similar
instruments that are also traded in OTC markets.

Swaps and other derivatives
involve risks. One significant risk in a swap, cap, floor, collar or swaption is the volatility of the specific interest rate, currency
or other underlying that determines the amount of payments due to and from the Company. This is true whether these derivative products
are used to create additional risk exposure for the Company or to hedge, or manage, existing risk exposure. If under a swap, cap, floor,
collar or swaption agreement the Company is obligated to make a payment to the counterparty, the Company must be prepared to make the
payment when due. The Company could suffer losses with respect to such an agreement if the Company is unable to terminate the agreement
or reduce its exposure through offsetting transactions. Further, the risks of caps, floors and collars, like put and call options, may
be unlimited for the seller if the cap or floor is not hedged or covered, but is limited for the buyer.

Because under swap, cap,
floor, collar and swaption agreements a counterparty may be obligated to make payments to the Company, these derivative products are subject
to risks related to the counterparty’s creditworthiness, in addition to other risks discussed in this SAI. If a counterparty defaults,
the Company’s risk of loss will consist of any payments that the Company is entitled to receive from the counterparty under the
agreement (this may not be true for currency swaps that require the delivery of the entire notional amount of one designated currency
in exchange for the other). Upon default by a counterparty, however, the Company may have contractual remedies under the swap agreement.

The Company will enter into
swaps