Company: PDCC
Filing Date: 2025-09-19
Form Type: 424B2
Source: 0001214659-25-013974
Chunk: 73

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-19
Form: 424B2
Chunk 73
---
 is no assurance that the composition or characteristics of SOFR, or any other alternative reference rate, will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability. This, in turn, may affect the value or liquidity or return on our investments, result in costs incurred in connection with closing out positions and entering into new trades and reduce the effectiveness of related fund transactions such as hedges. These risks may also apply with respect to potential changes in connection with other interbank offering rates ( e.g., Euribor) and other indexes, rates and values that may be used as “benchmarks” and are the subject of recent regulatory reform. The replacement of LIBOR with SOFR as the preferred refence rate for CLOs and their underlying investments could have a significant impact on our investments and the market for CLO securities generally. Accordingly, it is difficult to predict the full impact of the transition away from LIBOR on the Company until new reference rates and fallbacks for both legacy and new products, instruments and contracts have a longer term track record. Interest Rate Mismatch. Many underlying corporate borrowers can elect to pay interest based on various reference rates (such as 1-month term SOFR or 3-month term SOFR) in respect of the loans held by CLOs in which we intend to invest, in each case plus an applicable spread, whereas CLOs generally pay interest to holders of the CLO’s debt tranches based on 3-month term SOFR plus a spread. Because SOFR was developed relatively recently, there is little historical information regarding the spread between its various terms. The development of a material mismatch in the rate at which CLOs earn interest and the rate at which they pay interest on their debt tranches could negatively impact the cashflows on a CLO’s equity tranche, which may in turn adversely affect our cashflows and results of operations. Fluctuations in Interest Rates. In 2022 and 2023, the U.S. Federal Reserve increased certain interest rates as part of its efforts to combat rising inflation, and in September 2024 the U.S. Federal Reserve decreased such rates. On September 17, 2025, the Federal Reserve cut its benchmark interest rate by a quarter-point. Fed officials have signaled the possibility of two more cuts by the end of 2025. Changes in interest rates (or the expectation of such changes) may adversely