IBANK 10.2.20 Credit enhancement — cash collateral account
(1) Cash collateral account is a segregated trust account that is funded when a new series of sukuk is issued. The purpose of the account is to cover any shortfall (when the excess spread falls below zero) in the payment of coupons, principal or servicing expenses.
(2) The account may be funded:
(a) by the issuer; or
(b) more commonly, by the originator or another third party through qard.
(3) The pooling and servicing agreements of the sukuk issuance must state the amount of the cash collateral based on a specified percentage of the sukuk issued.
(4) The amount in the account may be invested in high-rated sukuk to generate profits.
|Inserted by QFCRA RM/2017-1 (as from 1st April 2017).|