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Consistent with a simple model of market segmentation, we document rating-based clientele effects in the corporate bond market. Supply shocks arising from idiosyncratic firm upgrades and downgrades cause significant price movements for the other bonds in both the affected rating bucket and nearby buckets. This effect is not driven by changes in risk and is persistent, with an approximate half-life of five months. Guided by the model, these results shed light on the demand price elasticity, the degree of rating-based market segmentation, and the speed of adjustment for arbitrage capital, all in the context of the corporate bond market.