Municipal bond issuance grew in 2009 and again in 2010, reaching about $475 billion, but that growth was driven by the Build America Bond program. Now that the BAB program has been closed, some municipal issuers are looking for alternative ways of raising funds since credit spreads have widened. Bill Rhodes, partner at Ballard Spahr in Philadelphia, said some of the smaller local government bond issuers that sat on the sidelines during the financial crisis but that now need to raise capital have returned to find the tax-exempt market too expensive or arduous.

"Don't forget that the triple-A bond insurers have all but gone now," Mr. Rhodes said. "Borrowers are having to worry about their own credit ratings, which could mean increased cost of borrowing or the time and expense involved in trying to get a credit rating."