Company: PDCC
Filing Date: 2025-09-16
Form Type: N-2/A
Source: 0001214659-25-013826
Chunk: 104

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-16
Form: N-2/A
Chunk 104
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in the primary market). Additionally, the Adviser believes that the protective rights associated with holding a substantial position in
a CLO equity tranche (such as the ability to call the CLO after the non-call period, to refinance/reprice certain CLO debt tranches after
a period of time and to influence potential amendments to the governing documents that may arise) may reduce the risk and enhance returns
in these investments. The Company may acquire a substantial position in a CLO tranche directly or we may benefit from the advantages of
such a position where both the Company and other accounts managed by the Adviser collectively hold a substantial position, subject to
any restrictions on the ability to invest alongside such other accounts. The Company may also transact in derivative or other instruments
for the purposes of hedging the portfolio, or to manage risks.

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CLO Overview

CLO Structure

We intend to pursue an investment strategy focused
on investing primarily in (i) positions in CLO equity tranches acquired in both primary and secondary market transactions; (ii) CLO debt
tranches; and (iii) other related investments. CLOs are securitization vehicles backed by diversified pools of mostly broadly syndicated
senior secured corporate loans. Such pools of underlying assets are often referred to as CLO “collateral.” While portfolios
of most CLOs consist of broadly syndicated senior secured loans, many CLOs enable the CLO collateral manager to invest up to 10% of the
portfolio in second lien loans, unsecured loans, senior secured bonds, and senior unsecured bonds.

CLOs fund the purchase of their portfolios through
the issuance of equity and debt securities in the form of multiple, primarily floating rate, debt tranches. The CLO debt tranches typically
are rated “AAA” (or its equivalent) at the most senior level down to “BB” or “B” (or its equivalent),
which is below-investment grade, at the junior level by a nationally-recognized rating agency. The interest rate on the CLO debt tranches
is the lowest at the AAA-level and generally increases at each level down the rating scale. The CLO equity tranche is unrated and typically
represents approximately 7% to 10% of a CLO’s capital structure. Below is an illustration to reflect a typical CLO in the market.

CLOs have two priority-of-payment schedules (commonly
called “waterfalls”),