In exchange for the lower rate, they grant the holder of the bond the right to convert the bond into the common stock of the company.

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In other words, the lower the stock went, the more shares the preferred holder could claim.

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While typical default rates for cardholders is in the 4%-4.5% zone, the HaloCard holder, say its founders, should be a lower risk and a higher spend.

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This is because any remedy would require that the sukuk be changed so that the sukuk holder shoulders a risk of loss, or of lower return, in years where the venture did not meet earnings expectations.

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