It stands for contingent convertible sukuk; a type of sukuk structure (hybrid securities) in which sukuk certificates give the sukuk holders a contingent right to convert their holdings into equity. A CoCo sakk (sing. of CoCo sukuk) becomes convertible if the price (value) of the issuer’s equity rises a certain amount, from the date of sukuk issuance.
Shari’a forbids hybrid securities due to the possible dilution of the original shareholder’s equity upon conversion and the amount of gharar (uncertainty) involved. Instead, under shari’a plain vanilla structures are preferred over complex ones.
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