Until the middle of 2007, the credit markets were essentially in a bubble. Underwriting standards were loose and there were fewer and fewer covenants.

As a result, many companies binged on debt financing such as for going-private transactions, stock buybacks and so on.

But, according to the Wall Street Journal [a paid publication], investors may now be taking some hits from their past sins.

Because debt had few restrictions, it made it easier for companies to hold onto their cash. Hey, might as well extend things and hope for things to improve, right?

That may be true, but what if things don't improve? Well, in that case, debt holders may see the value of their securities fall.

Take a look at Claire's Stores, which went private last year. The company's debt structure had paid-in-kind securities, which means that debt payments can be made by issuing more debt securities. So, when the company had to make a debt payment, it issued more debt -- not cash.

It's hardly something that encourages confidence. However, it appears that there's little that investors can do right now – that is, until things get much worse.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

The 18% haircut on Home Depot's (NYSE: HD) sale of its supply unit was not much of a surprise. Real estate continues to ail and the credit crunch added to the pressures. But the big test for private equity is the upcoming $29 billion buyout of First Data Corp (NYSE: FDC).

Well, Barron's [a paid publication] has an excellent analysis on the deal, which will require a whopping $24 billion in debt financing and is expected to close at the end of the month.

So, will there be pushback from the lenders -- which include Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Lehman Brothers (NYSE: LEH) and Merrill Lynch (NYSE: MER)?

Keep in mind that First Data already has a sizable debt load. The pricing on the new debt could sustain a material discount. If so, the lenders may need to take a write off or sell loans at a loss.

For example, First Data's interest payments may eat up most of its free cash flows. And, if the growth slows down, there could be negative cash flows.

In a restrained credit environment, this is not what lenders want to hear. In other words, I think we could see some fighting from the lenders to try to get a lower price on this deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.