Firms and other organisations that carry a lot of debt funding are said to be leveraged.

It means they are quite exposed if their cost of borrowing increases. At times of financial stress these firms have to find a way to reduce their exposure to debt and this process is known as deleveraging. When this involves selling assets in order to raise the cash they need to pay down debt this can be tough as in a slow market it may not be easy to offload assets at the right price. Deleveraging can also be triggered by regulators changing their capital requirements and forcing firms to take on less risk.