From a tax point of view, the decrease in conversion price due to a common dividend is a "constructive distribution" to the holder of the convertible, i.e., taxed without receiving cash. So an individual does not want to hold it, except in a tax deferred account (eg, IRA.) I think this characteristic, as well as the 4% current yield, targets pension funds and other current income requiring/tax deferred pools as likely buyers. I think this is why they did it, it opens up a completely new market for their equity. I also think it calms and comforts their repo lenders; this $600m is behind the repos, and they don't care if it's called a duck or a goose, as long as it is behind them, they like it. So the repo lenders know nly will be conservative, and to that extent will open lines up, which means an easing of leverage requirements. This is marginally good for nly in a squeeze, although as I said, it is my understanding that some repo lenders are willing to extend out in any case. I think this was a conservative move. I think three and six month repos are also a conservative move. I think (my opinion only) this is a conservative bunch who don't want to push a good thing too far.