toxic debt

Meaning

1. 1noununcountablefinance

   Loans or financial assets so risky that they are unlikely to be repaid, which can seriously damage the bank or investor holding them.

   Grammar: Uncountable: banks hold toxic debt, not toxic debts, in most uses.

   Patterns

   • toxic debt on something's books
   • clean up toxic debt

   The bank sold off billions in toxic debt to survive.

   Toxic debt on its balance sheet scared investors away.

   The government set up a fund to buy toxic debt from lenders.

Common combinations

hold toxic debt

Several lenders still hold toxic debt from the housing boom.

write off toxic debt

The bank had to write off toxic debt worth millions.

clear toxic debt

The plan aims to clear toxic debt from the system.

mountain of toxic debt

The company sat on a mountain of toxic debt.

toxic debt crisis

The toxic debt crisis spread across the banks.

Synonyms and how they differ

bad debt

Bad debt is any loan unlikely to be repaid, whereas toxic debt suggests a risk big enough to threaten the whole institution.

junk debt

Junk debt refers to low-rated bonds, a narrower sense than toxic debt.

non-performing loans

This is the technical banking term for loans not being repaid, which is more neutral than toxic debt.

subprime debt

Subprime debt means loans to risky borrowers, one common type of toxic debt.

Opposites

Word family

toxic asset noun

an investment that has become hard to sell and worth little

debt noun

money that is owed

debtor noun

a person or body that owes money

toxic adjective

poisonous or very harmful

Commonly confused: toxic debt or national debt?

Practice

Make it your own

Write a sentence using “toxic debt”, then check it and compare it with the examples above.

Explore more words