Markets and Financial Institutions (Sukuk)

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1. Introduction

RAM Ratings’ defines that sukuk default as not specific to any particular financial obligation but also the historical behaviour of the issuer’s corporate credit rating and is independent of the number and size of rated debt papers issued. They defined an event of default to include the following, a missed interest and/or principal payment, which is not remedied within the grace period; the legal insolvency or bankruptcy of the issuer; failure to honour the corporate-guarantee obligations provided to subsidiaries; and a distressed exchange in which the bondholders are offered a substitute instrument with inferior terms (e.g. extended maturities, lower coupons or diminished security packages).

Under the Malaysian jurisdiction, debt receivables are considered a permissible asset class for securitisation according to the Shariah Advisory Council (SAC) of Securities Commission (SC) Malaysia. This means jurisdictions adopting the AAOIFI standards will inevitably be utilising different sukuk structures and thus different methods of raising investor’s funds, than jurisdictions which rely on local law, as will be seen in the relevant sections.

There are two role security commision in sukuk which is take the initiative and the development of Islamic capital market conduct research and study and make policy recommendations related to product and capital market activities. Second is review of conventional products and listed securities for compliance with Shariah principles and operate an introduction to the products of the new Islamic.

For Straight A’s Portfolio Sdn. Bhd., the type of the sukuk that was issue is Murabahah Underwritten Notes Issuance Facility (MUNIF). The MUNIF is an Islamic debt programme pursuant to which the issuer may issue Murabahah Underwritten Notes (‘MUNIF Notes’). The MUNIF Notes is a short-term note. The MUNIF is based on the Syariah principles of Murabahah which is a contract that refers to the sale and purchase...
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