Sequential Search for Corporate Bonds

Kargar, Mahyar; Lester, Benjamin; Plante, Sébastien; Weill, Pierre-Olivier

doi:10.21799/frbp.wp.2025.08

Working Paper

Sequential Search for Corporate Bonds

Abstract: Customers in over-the-counter (OTC) markets must find a counterparty to trade. Little is known about this process, however, because existing data consist of transaction records, which only reveal the outcome of a search. Using data from a trading platform for corporate bonds, we unpack the search process. We analyze how long it takes customers to trade and how dealers’ offers evolve across repeated inquiries. We estimate that it takes 2-3 days to complete a transaction after an unsuccessful attempt, with substantial variation across trade and customer characteristics. Our analysis offers insights into the sources of trading delays in OTC markets.

Keywords: Over-the-counter markets; intermediation; corporate bonds; time-to-trade;

JEL Classification: G11; G12; G14; G21;

https://doi.org/10.21799/frbp.wp.2025.08