EOC # 15 on page 90.
The answer is confusing to me. They say that New issues result in widening of spreads and therefore creates buying opportunities. I thought it was other way around.??!!
New Issues will cause traders to rotate into the more liquid, newer bond. The spread on the older bonds will widen due to traders selling them. You can think of it either as the supply/demand, or from the liquidity premium perspective. The older bonds will have a higher liquidity premium(spreads widen), and will have less demand(for whatever motive the trader might have, typically tied to liquidity - but may be subordination, etc.)