We find that clients with stronger past trading relationships with a dealer receive consistently better prices in corporate bond trading. The top 1% of relationship clients enjoy transaction costs that are 51% lower than those of the median client—an effect which was particularly beneficial when transaction costs spiked during the COVID-19 turmoil. We find clients’ liquidity provision to be a key motive why dealers grant relationship discounts: clients to whom balance-sheet constrained dealers can turn as a source of liquidity are rewarded with relationship discounts. Another important motive for dealers to give discounts to relationship clients is because these clients generate the bulk of dealers’ profits. Finally, we find no evidence that extraction of information from clients’ order flow is related to relationship discounts.The over-the-counter (OTC) structure of the corporate bond market makes the value of bilateral interactions particularly important for investors. From a client’s perspective, having an estab￾lished relationship with a dealer can be valuable as it may allow the client to buy or sell bonds at greater ease or lower cost. For dealers, having a relationship with a client could be beneficial for managing inventory risk, for generating larger profits from loyal clients, or for extracting information from the client’s order flow. The benefits of such trading relationships may be par￾ticularly pronounced during times of severe stress, like at the outbreak of the COVID-19 crisis in March 2020, when the corporate bond market experienced significant dislocations.