An increase of the liquidity of corporate bonds other things, being equal shift the demand curve for corporate bonds to the right, and the demand curve for a treasury bonds shifts to the left.
When the liquidity of corporate bonds increases, it becomes easier to buy and sell them in the market this makes corporate bonds, more attractive in demand as a result, the demand curve for corporate bonds shift to the right.
On the other hand, when the liquidity of corporate bonds increases, investors may find them more appealing compared to treasury bonds. This causes a decrease in the. Demand for treasury bonds consequently the demand curve for treasury bonds shifts to the left.