Screening is a term which was never heard of in Islamic finance terminology in the past. However, screening has been very central in the modern Islamic finance landscape as it will ultimately determine what can be invested in and what is not. To this effect, one needs to understand the socio-economic background of this modern phenomenon that has led to the notion of screening to the central debate of Shariah compliance in some of the existing asset classes in Islamic finance.
Sukuk is one of the financial market products which are, by design, vulnerable to both technical and actual defaults. While actual default would come from the inability of the issuer to make timely payment of any financial obligation to the Sukuk investors, technical default arises from the failure of the issuer to meet certain financial ratios during the tenor of the Sukuk. These will normally be disclosed in the Terms Sheet or Prospectus of the Sukuk to which the Sukuk investors would have access to.