IBANK 10.2.21 Credit enhancement — takaful protection

A third party may provide takaful protection to sukuk holders against losses due to defaults or rating downgrades of sukuk.

Example of default

In ijarah sukuk, non-payment of rentals or redemption price by the lessee (originator).

Note Takaful protection against losses due to defaults or downgrades is permitted, because it is not a credit default swap in any way. The takaful participants have an insurable interest in the form of their credit exposures.

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