Sukuk Rating

PACRA’s approach to rating of various types of Sukuk is different. The Sukuks are either asset-based (also known as “issuer backed” Sukuk and asset-backed Sukuk. There is a difference between the two types and PACRA Sukuk rating methodology has a separate criteria for each. The credit risk in an asset-based Sukuk terminates into the issuer of the Sukuk. Most often Asset based Sukuk are known as Issuer backed Sukuk. Here, in case of default, Sukuk holders have recourse to issuer not the asset. However, asset backed Sukuk is somewhat different. In case of its deficiency in cash flows, Sukuk holders retain complete recourse to underlying assets but not the issuer.