Meaning & use
over-leveraged
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Meaning
adjectivecomparablefinance
Carrying so much borrowed money compared with your own funds or income that you risk serious trouble if things go wrong.
Grammar: Used before a noun or after be: an over-leveraged bank; the firm was over-leveraged.
Patterns
- be over-leveraged
- become over-leveraged
Several over-leveraged banks failed when house prices fell.
The company was badly over-leveraged and could not pay its interest.
Investors worried that the startup had become over-leveraged after three expensive acquisitions.
Common combinations
- dangerously over-leveraged
- The fund was dangerously over-leveraged.
- over-leveraged balance sheet
- An over-leveraged balance sheet scares lenders.
- over-leveraged company
- An over-leveraged company has little room to manage a downturn.
- become over-leveraged
- Households became over-leveraged during the credit boom.
- over-leveraged borrowers
- Over-leveraged borrowers struggled when rates rose.
Synonyms and how they differ
- overextended
- Overextended is broader and can mean taking on too much of anything, whereas over-leveraged is specifically about debt.
- heavily indebted
- Heavily indebted simply states a large debt, while over-leveraged implies the debt is large relative to assets or income.
- highly geared
- Highly geared is the British term for the same idea and sounds less dramatic.
Opposites
Word family
- leverage noun
- the use of borrowed money to increase possible returns
- leverage verb
- to use borrowed money or an advantage to gain more
- leveraged adjective
- financed partly with borrowed money
- deleverage verb
- to reduce debt
Commonly confused: over-leveraged or overdrawn?
over-leveraged vs overdrawn
Overdrawn describes a bank account that has gone below zero, while over-leveraged describes a heavy debt load relative to assets or income.
Practice
A firm borrowed so much that a small drop in sales would leave it unable to pay interest. How would an analyst describe it?
Choose one answer.
Over-leveraged means carrying too much debt compared with assets or income. Undervalued, overqualified and oversubscribed describe price, skills and demand, not debt.
Make it your own
Write a sentence using “over-leveraged”, then check it and compare it with the examples above.