Before revision:  The model considers interest rate and credit spread term structures and their dynamics. We show that illiquid bonds present an additional liquidity spread that depends on the time-to-liquidate aside from credit and interest rate parameters .
After revision:  The model considers interest rate and credit risks via a convenient reduced-form approach. We deduce a simple closed formula for illiquid corporate coupon bond prices when liquid bonds with similar characteristics (e.g. maturity) are present in the market for the same issuer. The key model parameter is the time-to-liquidate a position, i.e. the time that an experienced bond trader takes to liquidate a given position on a corporate coupon bond. We show that illiquid bonds present an additional liquidity spread that depends on the time-to-liquidate aside from credit and interest rate parameters .