Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 209

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 209
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 engage in currency transactions
for hedging purposes as well as to enhance the Company’s returns.

A non-deliverable forward
transaction is a transaction that represents an agreement between the Company and a counterparty (usually a commercial bank) to buy or
sell a specified (notional) amount of a particular currency at an agreed-upon foreign exchange rate on an agreed upon future date. The
non-deliverable forward transaction position is closed using a fixing rate, as defined by the central bank in the country of the currency
being traded, that is generally publicly stated within one or two days prior to the settlement date. Unlike other currency transactions,
there is no physical delivery of the currency on the settlement of a non-deliverable forward transaction. Rather, the Company and the
counterparty agree to net the settlement by making a payment in U.S. dollars or another fully convertible currency that represents any
differential between the foreign exchange rate agreed upon at the inception of the non-deliverable forward agreement and the actual exchange
rate on the agreed-upon future date. Thus, the actual gain or loss of a given non-deliverable forward transaction is calculated by multiplying
the transaction’s notional amount by the difference between the agreed-upon forward exchange rate and the actual exchange rate when
the transaction is completed. Although forward foreign currency transactions are exempt from the definition of “swap” under
the Commodity Exchange Act, non-deliverable forward transactions are not, and, thus, are subject to the CFTC's regulatory framework applicable
to swaps.

The ability to establish
and close out positions on currency futures contracts is subject to the maintenance of a liquid market, which may not always be available.
An option on a currency provides the purchaser, or “holder,” with the right, but not the obligation, to purchase, in the case
of a “call” option, or sell, in the case of a “put” option, a stated quantity of the underlying currency at a
fixed exchange rate up to a stated expiration date (or, in the case of certain options, on such date). The holder generally pays a nonrefundable
fee for the option, referred to as the “premium,” but cannot lose more than this amount, plus related transaction costs. Thus,
where the Company is a holder of options contracts, such losses will be limited in absolute amount. In contrast to a forward contract,
an option imposes a binding obligation only on the seller, or “writer.” If the holder exercises the option