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deleveraging

English translation: reducing debt

05:53 Oct 15, 2009

English to English translations [PRO]
Bus/Financial - Business/Commerce (general)

English term or phrase: deleveraging

The global financial downturn and subsequent deleveraging in the global market affected the equity.

What exactly is the meaning of the above word in this context?

Thanks and regards.

langclinic KudoZ activity Questions: 436 (1 open) (3 without valid answers) (4 closed without grading) Answers: 1440 India
Local time: 19:42

English translation:reducing debt

Explanation:
x

Selected response from:

Henry Schroeder
United States
Local time: 09:12

Grading comment

Selected automatically based on peer agreement.
4 KudoZ points were awarded for this answer

Summary of answers provided

5 +3

reducing debt

Henry Schroeder

5 +1

liquidation of debt

Charlesp

5 +1

A company's attempt to decrease its financial leverageor borrowed money for investment.

chaman4723

problem of inflated or ficticious or toxic assets

Stephanie Ezrol

downsizing leveraged equity

Goldcoaster

Answers

4 mins confidence:

peer agreement (net): +3

reducing debt

Explanation:
x

Henry Schroeder
United States
Local time: 09:12
Specializes in field
Native speaker of:

English
PRO pts in category: 4

Grading comment

Selected automatically based on peer agreement.

24 mins confidence:

peer agreement (net): +1

A company's attempt to decrease its financial leverageor borrowed money for investment.

Explanation:
A company's attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting.
Companies will often take on excessive amounts of debt to initiate growth. However, using leverage substantially increases the riskiness of the firm. If leverage does not further growth as planned, the risk can become too much for the company to bear. In these situations, all the firm can do is delever by paying off debt.

Any sign of deleverage shown by a company is a red flag to investors who require growth in their companies.
www.investopedia.com/terms/d/deleverage.asp

chaman4723
India
Local time: 19:42
Works in field
Native speaker of:

English,

Urdu

5 hrs confidence:

peer agreement (net): +1

liquidation of debt

Explanation:
In this context it appear to mean the liquidation of a massive stock of debt, ie when banks and other investors holding debt instrument unload them (in this case because of the increased risk of holding them, as the debt instruments were rapidly declining in value.

Or an alternative technical definition (taken from a website)
"De-leveraging is the process by which financial institutions and investors reduce the relative size of their assets to equity ratio."

Charlesp
Sweden
Local time: 15:12
Specializes in field
Native speaker of:

English
PRO pts in category: 16

5 hrs confidence:

problem of inflated or ficticious or toxic assets

Explanation:
The problem of leverage, or deleveraging in the modern (post 1987) context is the problem of derivatives. A large portion of derivatives in the form of securitized assets have come to be known as toxic assets. The "subsequent deleveraging in the global market affected the equity," because much of the equity held by corporations, endowments, pension funds, etc. was based upon a cascade of inflated values. The short expression which has been in the headlines for the last two years is "mark to market." But the underlying phenomenon was the incredible increase of alleged financial value in securitized assets while the physical values, wages, employment levels, machine tool production, steel production, etc were going down at increasing rates.
A stunning report of this collapse of ostensibly solid financial holdings was on the front page of the Washington Post this past Sunday.

Steep Losses Pose Crisis for Pensions
Two Bad Choices for Funds: Cut Benefits Or Take Greater Risks to Rebuild Assets

http://www.washingtonpost.com/wp-dyn/content/article/2009/10...

Stephanie Ezrol
United States
Local time: 09:12
Specializes in field
Native speaker of:

English

10 hrs confidence:

downsizing leveraged equity

Explanation:
reducing leverage intensity of equity

Goldcoaster
Switzerland
Local time: 15:12
Works in field
Native speaker of:

English,