SAN FRANCISCO — Citi said in a report released Monday that long-dated capital appreciation bonds issued by California school districts offer an opportunity for investors despite concerns about education funding. The zero-coupon bonds are cheap when compared to current coupon securities, the firm said.

“While zeros do come with risks, we believe they may also offer attractive opportunities for investors looking towards the long-end for locked-in yield,” Citi analyst Vikram Rai said in report Monday. “In our view, California’s fiscal challenges have no doubt contributed to the 'cheapness’ of its school district zeros.”

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