Good morning and welcome to the Pearl Diver Credit Company Incorporated second quarter earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Chakraborty Chakraborty. Thank you.

You may begin.

Good day, ladies and gentlemen.

Thank you for standing by. Bird Lever Credit Company refers participants on this call to the investor webpages for the press release, investor information, and filings with the SEC for discussion of the risks that affect the business. Pearl Diver Credit Company specifically refers participants to the presentation furnished today with the SEC and to remind participants that some of the comments may contain forward-looking statements and as such be subject to risks and uncertainties which if they materialize could affect results. References made to the section titled forward-looking statements in the company's press release for the quarter-ended June 30, 2026, which is incorporated herein by reference. We note forward-looking statements, whether written or oral, include but are not limited to Pearl Diver Credit Company's expectations or predictions of financial or business performance and conditions, as well as its competitive and industry outlook. forward-looking statements are subject to risks, uncertainties, and assumptions, which, if they materialize, could affect results. And such forward-looking statements do not guarantee performance. And as such, World Network Credit Company does not give such assurances. World Network Credit Company is under no obligation and expressly disclaims any obligation to update altered or otherwise revised any forward-looking statement as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to the operating results and other performance indicators applicable to Pearl Deferred Company are not necessarily indicative of results to be achieved in succeeding periods. I'll now turn the call over to Indranil Basu, Chief Executive Officer of Pearl Diver Credit Company.

Thank you to everyone joining us today for your interest in Pearl Diver Credit Company and welcome to our second quarter 2026 earnings call. We'd like to invite you to download our investor presentation from our website, which provides additional information about the company and our portfolio. With me today is our Chief Financial Officer, Chandrajit Chakraborty, and after our prepared remarks, we'll open it up to any questions. CLO equity markets recovered over the second quarter. Secondary activity was quiet coming out of March and into April, but trading levels picked up strongly from where they ended the first quarter. May was a record month for the asset class, with roughly $1.9 billion of CLO equity trading on divings. That return of liquidity to the equity markets supported valuations through the quarter end. Our results for the quarter reflect that recovery. Net asset value per share ended June at $11.15, up from $10.48 as of March 31st. Again, of 6.4%, and net assets rose to $77.3 million from $72.0 million as of 31st March. We recorded net unrealized gains of $6.7 million against $25.1 million of unrealized losses in the first quarter, and the portfolio generated A net increase in net assets from operations of $8.5 million. While these are largely non-cash market-driven movements and one quarter of recovery is not a trend, it is consistent with the view we put to you in May that the first quarter drawdown reflected spread widening rather than deterioration in the credit underlying our portfolios. Loan prices were broadly stable through the second quarter. The index ended June at 94.96, modestly higher than the 94.63 level when it closed in March. That was a change from the first quarter where concerns around AI-exposed sectors and geopolitical tensions drove prices lower. Senior CLO debt tranches continue to perform well, and CLO equity returns benefited from the stadier loan backdrop. Underlying fundamentals remain constructive, default rates are still low, and where we have seen weakness, it has been concentrated in individual credits rather than broad-based. With loan prices settling at levels still below par, new CLO equity continues to offer an attractive entry point, and we are finding assets at valuations we consider good value. Around a third of the underlying lows now trade above par, which carries some spread compression risk, though we believe that this has largely run its course after weighing on returns through all of 2024 and into early 2025. The reinvestment profile of the book is worth putting numbers to because it is the feature that gives the underlying CLOs room to work. Approximately 70% of the portfolio by net asset value sits in deals with reinvestment end dates of 2029 or later. Roughly 25% in 2029, 37% in 2030, and 6% in 2031, with about 21% reaching reinvestment end during the current year, 2026. That is a long runway. It means large majority of the portfolio can continue to reinvest repayments at today's low prices. It allows CLO managers to work through individual credit or sector weakness, and it limits our exposure to crystallizing value at an unfavorable moment. As CLO equity investors, we view dislocations like these as a chance to take advantage. Risk sentiment record through the second quarter and both loan and CLO liability spreads tightened as a result. The pressure that built in March, driven by concerns around AI-exposed sectors and Renew Geopolitical Tension gave way to a steady rally through April and May. The environment that developed over the quarter was more constructive than we expected at that point. CLO liability spreads tightened across the capital structure and the move was most pronounced further down the stack. Triple A spreads came in from 125 basis points at the end of March to 121 at the end of June. Double A spreads tightened 10 basis points over the same period. Mezzanine and junior tranches moved considerably more, with triple B spreads tightening around 60 basis points to 250 basis points, and double B spreads tightening roughly 140 basis points to 510 basis points. Most of that rally came through April and May. Spreads reached their tides in late May and then drifted modestly wider and settled into a narrow race through June. And they have held around those levels since quarter end. Primary CLO issuance totaled approximately $26 billion in the second quarter, down from roughly $39 billion in the first. April was notably quiet at under $5 billion before volumes recovered to about $13.5 billion in May. The most significant activity was in resets and refinancings, which totaled approximately $84 billion against roughly $49 billion in the first quarter, with both May and June running above $30 million each. Tighter liability spreads made refinancing existing capital structures compelling, and with loan supply limited, activity was directed more towards resetting existing vehicles rather than building new ones. That has carried into the third quarter, with roughly $30 billion of resets and refinancings having been carried out in July. We completed five resets and refinancings. Approximately 12% of the portfolio and added one new position that offered attractive relative value. Across these deals, we have reduced the weighted average cost of debt by 33 basis points and reduced AAA spreads by 27 basis points. That is a materially larger program than the four deals and roughly 6% of the portfolio we completed in the first quarter. And it locks in cheaper liabilities for the life of those structures. This rotation partially has offset a slight decrease in the portfolio's weighted average gap yield to 10.33% at quarter end compared to 11.27% as of 31st March. As of 30th June, our portfolio consisted of 59 CLO equity positions managed by 34 different distinct CLO management platforms. The underlying loan portfolios include approximately 1,400 obligors across more than 30 sectors with no single CLO position representing more than 5.1% of the portfolio and our largest corporate obligor exposure standing just at 70 basis points. Merely all our investments remain in their investment periods with the flexibility to adjust exposures Reinvestment Prepayments at Attractive Levels and Manage Sector-Specific Risks as the Market Evolves. We believe this diversification and reinvestment flexibility continue to position the portfolio well. The second quarter brought a more constructive backdrop for CLO equity with liability spreads tightening across the capital structure, as we already mentioned, and secondary trading activity recovering strongly. We believe This creates a more supportive environment for disciplined CLO equity investing. Underlying credit performance also remains resilient, with defaults contained across the market. Our portfolio's last 12-month default rate stood at 1.08% through the second quarter, broadly in line with the wider CLO market, which stood at 1.1%. and well below the overall leveraged loan market default levels, which stood at 2.29%. We are watching this closely, though our diversification and the investment flexibility our CLO managers retain leave us comfortable with how the portfolio is positioned. Against this backdrop, we believe CLO equity remains well positioned to generate attractive cash flows supported by active collateral management and disciplined credit selection. We will continue to monitor the macro environment closely and deploy capital selectively where we see attractive risk-adjusted opportunities. We remain constructive on CLOs and we believe our data-driven approach to manager selection and portfolio construction is well-suited to this environment. Our focus remains the same. concentrate on disciplined portfolio management, invest opportunistically when we find attractive risk-adjusted positions, and drive long-term total return. One observation on how we run the vehicle compared to other closed-ended listed funds is worth mentioning. Consistent with our disciplined strategy since inception, we maintain lower leverage at 32.9% of total assets, and a strong asset coverage ratio at 295%. We also charge the lowest base and incentive fee. We regard that as a structural advantage embedded in our ethos. With that, I'll now turn the call over to Chandrajit for a more detailed review of our financial highlights for the quarter.

Thanks, Indranil, and hello, everyone. For the quarter ended June 30, 2026, We delivered investment income of $4.2 million or $0.60 per share of common stock compared to $4.8 million or $0.70 per share in the prior quarter. Total expenses for the quarter were $2.2 million or $0.32 per share compared to $0.31 in the previous quarter. We recorded Net unrealized gains on investments of $6.7 million or $0.97 per share compared to net unrealized losses in the prior quarter of $25.1 million or $3.67 per share. We also incurred a modest net realized loss of $107,000. In total, Net investment income was $1.9 million or $0.28 per share. Our net increase in net assets resulting from operations was $8.5 million or $1.23 per share compared with a net loss of $22.5 million or $3.28 per share in the first quarter. Recurring cash flows from the Cielo portfolio remained strong, totaling $8.8 million or $1.27 per share, exceeding distributions and expenses by $0.38 per share, compared to $10.5 million or $1.53 per share in the prior quarter. Moving to our balance sheet, as of June 30, 2026, total assets were $116.9 million and total net assets were $77.3 million, resulting in net asset value per share of $11.15. This compares to net asset value per share of $10.48 as of March 31st, a $0.67 increase in NAS. Net investment income contributed approximately $0.28 and net unrealized gains approximately $0.97 offset by a small realized loss and by the $0.57 per share we distributed during the quarter. Available liquidity consisting of cash and short-term investments, net of unsettled trades was approximately $3.2 million and the company had leverage of $38.4 million, composed of $33.7 million of Series A term preferred stock, net of unamortized deferred issuance costs, and $4.7 million in short-term reverse repurchase agreements. Our leverage at the end of June was 32.9% of total assets, down some 35% at the end of March and within our long-term target leverage range of 35% to 35%. And our asset coverage ratio was 295%. We have deliberately not leveraged into the recovery. If conditions continue to remain firm, we retain the capacity to do so on our own timetable. Our leverage levels will vary over time as we intend to utilize leverage opportunistically when attractive investment opportunities arise and for short-term cash management purposes. We continue to execute shared issuance through our at-the-market or ATM equity issuance program. During the quarter, we issued 65,959 shares for net proceeds of approximately $0.7 million. We distributed dividends of 22 cents per common share in April and May and 13 cents per share in June. We will distribute a dividend of 13 cents per share at the end of the month and we declare today that we will maintain our 13 cents per share dividend for September, October, and November. When setting our dividend, our board looks at a number of factors, including net investment income, taxable income, recurring cash flows from our investments, and the outlook for our investment portfolio. Aligning distributions with what the portfolio is actually earning is what protects net asset value across a full cycle. And this has been our strategy since the IPO, to be responsible stewards of the capital. In summary, we believe our proactively and prudently managed investment portfolio positions us well to deliver attractive, risk-adjusted, and sustainable total return to our shareholders. I'll now turn it back to our CEO, Indranil Basu.

Thanks, Chandrajit. We closed the first quarter saying we would monitor the environment closely and deploy selectively. Three months on, the picture has improved. Net asset value recovery, Liability spreads tighter across the capital structure, secondary liquidity restored, and a refinancing program that has taken 33 basis points out of our cost of debt. We are not declaring that the cycle has turned, and we will not manage this portfolio as though it has. Net investment income declined again this quarter, and we have set the distribution accordingly. We are more constructive today than we were in May, and we continue to be excited about the opportunities in the CLO market and the long-term resilience of the asset class in the face of ongoing macro uncertainty. Fundamentally, we believe that CLOs provide investors with an efficient way to access the senior secured corporate loan asset class and can offer an attractive Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.

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