This may be due to tax considerations or maybe they just forgot to do it. Some of the more recent issues are convertible into shares of different issuers who may be in different countries. This type of bond is also exposed to currency risk. For example, there are several US convertible bonds whose underlying shares trade in Thai Bhat. Step up coupons.
Dividends affect the share price and, as such, they impact the price of the convert.
At time we may want to model a certain dividend yield. In other circumstances, the yield may be a cash amount that is fixed regardless of the price. In many situations the next few dividends may be modeled as known cash dividends and thereafter, it is more appropriate to model a dividend yield. Next month we will continue with a discussion concerning the modeling of a convertible bond. Izzy Nelken is the owner of Super Computer Consulting Corporation which provides services to the financial community.