(Bloomberg) -- Barclays Plc is urging investors to look at Build America Bonds, which have weakened broadly over the past few months as a handful of issuers moved to call securities earlier than expected, delivering potential losses to debtholders.

Strategists led by Mikhail Foux said deals can be found in certain types of Build America Bonds, such as those unlikely to be called. They also highlighted issues with low coupons, like one for the Salt River Project in Arizona, which carries a 4.8% coupon and matures in 2041. 

“People are concerned about BABs altogether, but there is still a universe of bonds that are attractive, even at these levels,” Foux said in an interview.

Investor apprehension around Build America Bonds — taxable municipal securities sold as part of a federal program after the financial crisis — has grown as a small number of issuers try to call them back from investors and replace them with lower-cost tax-exempt offerings. That’s an attractive move now in part because non-taxable yields are low relative to their taxable counterparts, according to Barclays.

In a sign of how the market has gotten beaten up, an index of Build America Bonds has cheapened in recent months relative to a broader taxable gauge, according to a Friday note by Bank of America Corp. strategists led by Yingchen Li and Ian Rogow.

Investors have pushed back against the refinancing trend. In one case, a group hired a law firm to challenge a $1 billion refunding deal by the Regents of the University of California. 

The challenge centers around whether the university system’s taxable debt can be refunded under a call provision that may be invoked in the occurrence of an extraordinary event. The move to refinance is premised on the notion that such an event did take place, in the form of federal budget cuts over a decade ago.

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Foux listed several types of BABs that look appealing. 

Most BABs with this extraordinary provision can be called at an agreed-upon price, known as the strike price, which is typically a spread to Treasuries. Debt trading wider than that price is worth buying, assuming investors are comfortable with the credit quality, Foux said. He also pointed to bonds with low coupons that are trading below par.

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