Why the prospective $70 billion buyout of Walgreens may signal the stock-market rally is about to end

For one, Walgreens WBA, already has $15 billion in debt on its balance sheet. A potential bidder would need to add more leverage to fund the purchase. That would leave the drugstore chain particularly vulnerable when the credit cycle turns -- which is looking increasingly likely.

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the share of new leveraged loans with no maintenance covenants -- requiring the borrower to maintain certain financial buffers such as a debt-to-Ebitda ratio, or earnings before interest, tax, depreciation and amortization, of less than five times -- has tripled since 2007, the U.K. central bank said.

Banks are already struggling as investors steer clear of hefty private-equity debt package. Take Bain Capital's $4 billion buyout of market-research firm Kantar in July. The U.S. private-equity firm lined up 11 banks to assemble a $3 billion debt package.

But after an underwhelming reaction from the market, the banks had to restructure the debt package to make it more palatable to investors. This included raising the pricing on the loans and tightening the covenants.

Secondly, Walgreens finances aren't looking so good. The company's profit in the fourth quarter plunged 55% to $677 million, compared with the same quarter in 2018.