By Dan Primack
June 14, 2013

FORTUNE — Some potentially seismic news for the private equity market yesterday, as Yankee Candle canceled a $950 million debt refinancing that would have resulted in a $187 million dividend for owner Madison Dearborn Partners. Not yet reported is that fellow Madison Dearborn portfolio company Asurion Corp. also ended its pursuit of an $850 million term loan to refinance existing debt that comes due in 2017.

To be clear, this isn’t a Madison Dearborn issue. It’s an industry issue.

Private equity has been propped up over the past few years by artificially low interest rates – an environment that has allowed the industry to often escape negative repercussions for its pre-crisis overspend. But now rates are rising in anticipation of next week’s Fed meeting and the dreaded “T” word.

“We’ve all been expecting this for some time, and now it finally seems to be happening,” explains a senior private equity exec. “Low rates were fun while they lasted.”

To be sure, it’s possible that Big Ben won’t actually announce tapering of the Fed’s bond buyback program – but the debt markets seem to think he will (if not next week, then soon thereafter).

And if that happens, debt refinancing are about to get much, much harder. So will getting well-priced financing for new deals (got to wonder if this has thrown a wrench into Icahn’s Dell financing plans – assuming he still has Dell financing plans).

Private equity execs often blanch at the term “financial engineering,” but estimates are that firms have done more refinancings for existing portfolio companies over the past year than they’ve done new transactions (including bolt-ons).

So if a firm really doesn’t rely on financial engineering, it shouldn’t have anything to worry about. But for everyone else, here’s to hoping you either got your refi done already or actually have an operational roadmap for substantial growth…

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