Investors' reduced appetite for risk is sending a chill through the trading floors of Wall Street and the loft spaces of San Francisco.

The large pop in the share price of mobile payments firm Square Inc on its stock market debut on Thursday may not be enough to bring comfort to fellow technology firms such as Dropbox and Cloudera, which are expected to go public in the coming year.

The early-morning 64-percent surge in Square's shares came after the firm priced its initial public offering at a 42 percent discount to its last private valuation. The stock closed up 45 percent.

Square is not the first of the so-called unicorns - private companies valued at $1 billion or more - to go public below its private valuation. But it is the largest in recent years and the boldest sign yet that investors do not want to play at any price.

“Until you have 10 of these deals that trade up 50 percent, they’re not going to buy these valuations,” said Chris Bulger, managing director of Bulger Partners, a tech advisory firm in Boston.

IPO consultants and attorneys said they expect 2016 to be even quieter for tech firms going public, and highly valued companies that do go that route are more likely to sell shares below their private valuation. That could mean more canceled and postponed IPOs.

Banks On The Hook

For investment bankers, investor caution in both the equity and debt markets is proving costly.

Banks, led by Morgan Stanley and Bank of America, are on the hook for $5.6 billion after weak demand from investors forced them to postpone the refinancing of debt backing Carlyle Group's $8 billion acquisition of Symantec Corp's data storage unit, Veritas.

Fashion department store operator Belk Inc had to cut the price of a $1.5 billion loan backing its buyout by Sycamore Partners. On Thursday, Cowlitz Tribal Gaming Authority reduced the size and cut the price of a loan meant to finance a resort and casino.

Morgan Stanley and Bank of America were among the banks on the Belk loan and Bank of America was the lead arranging bank on the Cowlitz financing.

Both banks declined to comment, but Colm Kelleher, head of institutional securities at Morgan Stanley, said earlier this week that the overall market for leveraged lending was in a much better condition than during the financial crisis.

"We are seeing selectively one or two deals that are having problems clearing here. I think they're of an idiosyncratic nature, but I'm on very high alert for that," he told an investor conference.

Post-crisis rules on how much risk banks can take on mean they are also more reluctant to back new deals with big debt and some are selling loans at a discount.

"The banks went into the volatility of August and September with a decent amount of exposure. They have had fairly awful third quarters. The outlook for the fourth quarter does not look much better, M&A looks great but the fixed income division has had a very hard time," said Oliver Wriedt, co-president of CIFC asset management.

"We expect them to be continue to be in de-risking mode from here to year end," he added.

Investors Gain Upper Hand

After a binge on credit in the aftermath of the financial crisis, investors are becoming more picky about debt financing as the U.S. Federal Reserve looks set to raise interest rates for the first time in nearly a decade next month. On top of that, the recent sharp drop in prices of riskier debt has left some nursing losses.

That is a worrying sign for mergers and acquisitions, which has hit record high volumes this year, in part fueled by cheap loans. In certain sectors, however, those loans are proving more difficult to sell.

“You’re seeing a bifurcation of the market. Cyclical sectors like retail and other aggressively levered transactions are struggling, while non-cyclical sectors like cable or semiconductors are steady," said Dan Whalen, BNP Paribas head of loan syndication. "But the pendulum has absolutely swung in favor of the buy-side right now."

In the tech IPO market, investors are also gaining the upper hand, increasingly calling for more protections on their investments, such as the ratchet that required Square to distribute additional shares to late-stage investors, to give them the minimum 20 percent return it had promised.

Protections have long been used, but in the last six months - as concerns over valuations have grown, exacerbated by the stock market tumbling in August - they have become more creative and more common, said analysts.

Max Wolff of Manhattan Venture Partners said financing deals now include more intricate structures, including extensive guarantee return provisions and discounted access to future rounds, inspired by hedge funds’ practices. They are becoming the norm in venture capital deals.

“Investors are saying: ‘You the company can take your half-reasonable valuation, if I can pick my structure’,” he said.