The fall in corporate bond liquidity has been well documented. Dealer inventory and market liquidity has plummeted in spite of enormous issuance. All that paper seems to be getting put away by real money accounts. Yields are too low to make a lot of sense for leveraged players – not enough carry to care much. Prop desks, who might have traded a lot of this paper as part of their positions, have disappeared – victims of the Volcker Rule, Basel III and reduced risk appetite. The must read on the topic is Ben Eisen’s “Mile Wide, inch deep, Bond market liquidity dries up” in Marketwatch.