Short term yields turn supersonic

First Capital Securities, one of those development finance firms that advertises secured debentures at interest rates in the order of nine per cent, is helping a related company to branch out into marketing even higher yield investment.

The company is supporting the fundraising efforts of a new company, Short Term Advances, which promises to pay investors a return of two per cent a month, or 24 per cent a year.

First Capital ran an ad in Wednesday’s business section of the Australian seeking sophisticated investors willing to invest for up to one year. The ad said First State’s client – described as a “national company” – would “lend for all types of bridging finance, with strict guidelines and documented exit strategies.”

A company spokesman explained yesterday that Short Term was not a subsidiary, but does share a common managing director in Stephen Morris. Short Term plans to lend money to people as bridging finance, secured against expected inheritances from deceased estates, court settlements and similar purposes. Short Term has been trading for about six months.

First Capital Securities, the vehicle used to raise debentures to fund property development, reported a loss of $730,000 in the six months from formation to December 2004, and had assets of less than $2 million at the time. The firm advertises returns of between 8.3 per cent and 9.75 per cent for terms of between six months and three years for investment in the debentures.