Assume a bond portfolio in an ALM [Asset Liability Management] model or an ESG [Economic Scenario Generation] portfolio model. In order to be market consistent, a spread over the risk-free curve is calculated for each bond at $t=0$ to match the market value.
Without any further information about e.g. changes in liquidity or credit risk, I would have assumed that the spread stays constant over the lifetime of the bond in the model. However, I have seen that at least one ESG allows to phase out the spread over time in a linear way.
What is the current market practice concerning these spreads and do some academic papers about dynamic modelling of these spreads exist?