IBANK 10.2.16 Credit enhancement

(1) Credit enhancement, of sukuk, is the raising of the credit quality of the sukuk above that of the underlying assets. The mechanisms for credit enhancement include:
(a) over-collateralisation;
(b) excess spread;
(c) cash collateral; and
(d) takaful protection.
(2) The purpose of credit enhancement is for the sukuk to obtain higher credit rating from ECRAs (and thereby reduce both the credit risk to the sukuk holders and the funding cost of the securitisation for the originator).

Note For the use of ECRAs, see rules 4.3.7 and 4.3.8 and Division 10.2.E.
Inserted by QFCRA RM/2017-1 (as from 1st April 2017).