IBANK 10.2.18 Credit enhancement — over-collateralisation

An originator may retain a small equity participation in a pool of securitised assets to provide over-collateralisation.

Example

The originator of a securitisation of a pool of ijarah lease assets might securitise 90% of the pool and retain 10% as an equity position (that is, a residual claim). The sukuk holders would be entitled to income based on 90% of the rental income from the pool, and the originator would be entitled to income based on the remaining 10%.

Inserted by QFCRA RM/2017-1 (as from 1st April 2017).