CEVB stands for "Closed-End Variable Basis," and it refers to a financial term or concept commonly used in the context of structured finance or capital markets. It is a type of variable basis in a closed-end structure, typically involving a funding arrangement for a specific purpose.
In the world of investment banking, a closed-end structure refers to a finite, fixed pool of funds that are raised from investors for a specific purpose, such as financing a project or a company. Meanwhile, a variable basis refers to the interest or coupon rate that is adjusted periodically based on certain predetermined factors.
Therefore, CEVB, as a combination of both closed-end structure and variable basis, is a financing arrangement where the interest or dividend rate on the fund changes periodically, similar to a floating rate, but within the confines of a closed-end structure. This structure allows for more flexibility and adaptability in matching the financing strategy with market conditions.
The concept of CEVB is often utilized in sectors such as infrastructure development, real estate investment, and structured products. It enables investors to benefit from potential interest rate adjustments, while also giving the issuer or borrower the flexibility to manage interest rate risk in a more dynamic manner.
Overall, CEVB represents a financing structure that combines the fixed nature of a closed-end fund with the variability of interest or dividend rates, providing both investors and issuers with certain advantages in terms of managing risks and capitalizing on market conditions.
