How New Bond Issuance Influences the Liquidity of Covered Bonds

Journal of Fixed Income, Vol. 29 (2)

Posted: 23 Jun 2019 Last revised: 15 Sep 2019

See all articles by Michael Weigerding

Michael Weigerding

University of Liechtenstein; Commerzbank AG

Date Written: June 17, 2019


This study shows how primary market supply influences the secondary market liquidity of outstanding bonds. Liquidity is higher around new bond issuance by the same issuer and in the same maturity segment. It rises once the new issue is priced and remains elevated for several days. The effect is mostly attributed to switch trades between old and new bonds. It increases by the volume issued and decreases by the amount of similar paper outstanding. The liquidity surge is positively linked to the new bond's attractiveness; it is stronger during times of positive market sentiment.

Keywords: trading activity, market liquidity, market microstructure, new issuance, covered bond

JEL Classification: G12, D47

Suggested Citation

Weigerding, Michael, How New Bond Issuance Influences the Liquidity of Covered Bonds (June 17, 2019). Journal of Fixed Income, Vol. 29 (2), Available at SSRN: or

Michael Weigerding (Contact Author)

University of Liechtenstein ( email )

Vaduz, FL-9490

Commerzbank AG ( email )

Frankfurt am Main, D - 60261

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