Investigating the possibility of using credit default swaps to cover Sukuk credit risk

Issuance of Islamic securities (sukuk) is one of the innovations of recent decades that open bright opportunities on the Islamic financial system. These bonds based on Islamic contracts are designed to substitute for securities, especially bonds are considered usury. The risks of this tool is the most important aspects that should be considered in the design of financial instruments. The first step in risk management, identification of risks and the next step is to reduce or eliminate it, thereby encouraging investors to buy these tools, resulting in a growth market to be provided. In this article dealt with the management of credit risk and cover this risk. So far, the country's financial rules in Iran (rules of the Securities and Exchange Money and Credit Council and the Council) have been trying to pay guarantee obligations to cover credit risk for investors. We believe that the guarantor for the bonds, despite the many advantages, but also disadvantages, which is better than other methods should be used to cover this risk. In this paper recommended credit default swaps as a good way to cover sukuk credit risk.