(FORTUNE Magazine) – On March 28 a consortium of seven private-equity firms led by Silver Lake Partners and including heavyweights like KKR and Blackstone announced plans to acquire SunGard Data Systems for $11.4 billion. It would be the largest LBO since KKR's historic 1989 acquisition of RJR Nabisco--and a sure sign the Big Deal is back.

But today the deal, which isn't expected to close until the third quarter, is causing more angst than excitement. The reason: The massive debt needed to finance it is suddenly not as appealing to investors as it was just a few short months ago. Junk-bond issuance has slowed to a trickle. "Constipated" is how a partner at one buyout firm describes the market. If this lasts, it could create some wrinkles in the financing for SunGard as well as other deals that have been announced, including the $6.6 billion acquisition of Toys "R" Us. Is this a sign of a top?

Many people will tell you that the market is just catching its breath, and that because most LBOs have been done at "reasonable" prices, everything is fine. There is, however, a debate about just how reasonable some of these deals are. Take SunGard: After the acquisition the company is expected to have a ratio of roughly 7.5 times debt to 2005's estimated cash flow. Just a few years ago banks were reluctant to provide financing at more than five times cash flow.

And that's not the only hint of excess these days. Buyout firms have done lots of "dividend deals," in which they do an LBO, layer more debt onto a holding company, and then pay themselves a huge dividend--thereby taking a chunk of their money off the table, of course. In early 2004, Blackstone bought chemical company Celanese for roughly $4 billion, using $832 million in equity. Less than six months later a holding company issued more debt (this batch was "pay-in-kind," meaning the interest accumulates as additional debt until cash payments start in 2009), and $500 million of the proceeds went to Blackstone and its co-investors. In early 2005, Celanese sold shares to the public along with a slug of preferred stock. A big chunk of the proceeds--$804 million--also went to Blackstone and its co-investors. In other words, Blackstone has gotten its money out--and then some. But Celanese now has some $2.5 billion in net debt. That's manageable, but the company's filings warn that it may not be if, say, the economy takes a sharp turn for the worse.

Another worry is that the intense competition to collect fees from buyout firms may lead banks to commit what a partner at a private-equity firm calls "unnatural acts," by which he means providing capital at too cheap a rate. LBOs are usually financed with a combination of bank debt--pieces of which are often then sold to other investors--and high-yield bonds. (Lately hedge funds have also been willing providers of capital.) For deals involving public companies, banks provide a "bridge loan": If the junk-bond market shuts down between the time the deal is announced and when it closes, the banks agree to provide the money instead. Normally bridge loans are never even funded; they exist to reassure the company that the deal won't blow up because of a bad market. And the markets have been eager to snap up all kinds of debt--until recently.

Which brings us back to the SunGard deal. Part of the financing package consists of some $5 billion in bank debt and $3 billion in bridge loans. In an internal memo that was read to FORTUNE, bankers at one institution argue for extending the money in part because the bank has earned hundreds of millions of dollars in fees from the private-equity funds doing the deal. Of course, SunGard was signed before the market got balky. Now participants in the buyout market say that the banks with the most exposure--Deutsche Bank, Citigroup, and J.P. Morgan Chase--could get stuck with some of the bridge loans at uncomfortably low interest rates. But one banker involved in the deal says that while ideally he'd like a higher interest rate, he'd sign the same deal again today rather than lose the business. Another notes that there's still plenty of time for the market to stabilize.

There are many reasons why we're unlikely to see a repeat of the 1980s meltdown--among them, banks have much stronger balance sheets today. But the market's jitters are a reminder that with the potential for great reward comes a four-letter word called risk.

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