Deleveraging

Compa­nies often increase the propor­tion of debt capi­tal in order to gene­rate stron­ger growth (leverage). In return, this addi­tio­nal borro­wing increa­ses the risk of no longer being able to meet obli­ga­ti­ons. Dele­ver­aging refers to the substi­tu­tion of debt capi­tal with equity capi­tal, resul­ting in a reduc­tion in leverage and thus in the risk assumed.