Charles Ross, managing director of Sterling Asset Management. - File

Investment management company, Sterling Asset management, has launched a U.S. dollar loan facility, Sterling Silver, that will allow its clients to borrow up to 80 per cent of their principal.

"There is a lot of interest in short-term lending where people need to borrow for the short term," said Sterling's managing director, Charles Ross.

"At the same time, people want to save for the long term as well, so [Sterling Silver] allows you to earn income on your investments while borrowing against the principal."

Essentially a demand loan, borrowers can repay the debt early without any penalty, unlike similar products offered by traditional lenders.

No processing fee or commitment

There are no commitment or processing fees.

"One of the things people are very afraid of is that there are so many conditionalities and so much cost in going to a traditional institution to borrow money," commented Ross.

The product is among Sterling's medium-term strategies to increase its portfolio of management activities by accessing emerging and international capital markets for new products to the Jamaican investor.

Interest on the facility is 10.75 per cent charged on the reducing balance.

The approval process is relatively short - three days - and the loan is disbursed once the loan is approved. Sterling Silver is available to Sterling's clients who hold a US$ bond account, repo account, mutual fund or other U.S. investment account.

"The majority of investments that we hold for clients is in foreign currency instruments and clients are able to access loans at a much lower rate," said Ross.

In fact, 80 per cent of Sterling's total assets invested in AAA-rated U.S. government agency bonds.

Capping the loan at 80 per cent of the client's funds was done to protect both Sterling and its customers, said Ross.

"It really is a prudential measure as well as the fact that different securities can attract different levels of financing. We have a lot of clients who have bought bonds outright and thosebonds are subject to fluctuation in price we don't expect they will fluctuate 20 per cent or more."

ashford.meikle@gleanerjm.com