The private equity firm KKR has been forced to restructure $9bn of debt, after its plan to acquire Alliance Boots was rejected by investors.
The company now looks set to pay £250m more than was originally expected for the debt for the record £11bn leveraged buy-out.
The financing deadline for the Alliance Boots deal passed on Friday without agreement as the buyers' strike continued.
According to the Telegraph, the interest rate spread charged on low-grade corporate debt has on average jumped 130 basis points in Europe in one month and is leading to a credit squeeze, that is likely to affect the buoyant merger industry.
Investors service Moody's, among the world's most widely utilized sources for credit ratings has already downgraded the company's bonds, warning of "very significant indebtedness''.