On-The-Run Treasuries (OTR)
Definition of 'On-The-Run Treasuries (OTR)'
As a bond ages it no longer falls into the maturity that it was initially issued under. For example, one year after a 5-year bond was issued it is now a 4-year bond and traders wanting to trade 5-year bonds would be reluctant to trade the older bond if a new 5-year On-The-Run treasury has been issued.
The On-The-Run Bond or Note is the most frequently traded Treasury Security for its maturity. As such, it will be more liquid, more expensive (high demand) and have a lower yield than its Off-The-Run counterpart.
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