IBANK 10.4.4 Treatment of credit enhancement provided by firm that is also originator or issuer

If an Islamic banking business firm that is the originator or issuer of a sukuk issuance also provides credit enhancement in relation to the sukuk, the risk-weight of the exposure from the enhancement must be calculated as if the firm were an investor in the sukuk securitisation, so that:

(a) if the enhancement is provided in relation to an asset-backed sukuk issuance (that is, an issuance where there is transfer of both legal and beneficial ownership over the assets) — the firm must treat the enhancement provided based on the risk of the underlying assets; or
(b) if the enhancement is provided in relation to an asset-based sukuk issuance (that is, an issuance where there is transfer of only beneficial ownership over the assets) — the firm must treat the enhancement provided based on the ECRA rating of the firm as originator.
Inserted by QFCRA RM/2017-1 (as from 1st April 2017).