May 26, 2011 / 10:39 PM / 9 years ago

Itau Unibanco's securities unit to sell Brazil CLO

* Itau BBA plans 400 million reais CLO, IFR says

* Sale signals investment bank unit reached loan limit

* Bank spokesmen could not be reached to comment

SAO PAULO, May 26 (Reuters) - The securities unit of Brazilian bank Itau Unibanco (ITUB4.SA)(ITUB.N) is considering selling 400 million reais ($249 million) in collateralized loan obligations, signaling that the unit has reached a limit in its lending, International Financing Review said on Thursday.

Itau BBA, as the unit is known, specializes in wholesale and investment banking. The transaction is attracting the attention of local debt capital markets bankers, who interpreted the move as a way of freeing up cash for loans, IFR said, without giving the source of the information.

A CLO is a form of securitization where interest payments on a pool of generally large corporate loans are bundled together and sold to investors in different portions. The Brazilian unit of ABN Amro sold about $1 billion worth of CLOs in late 2007, in what became the first such deal in Latin America’s largest economy.

“If they are securitizing, it means they may be reaching a limit in their lending,” a local banker told IFR, adding that if Itau BBA is close to reaching its limit for lending, credit could soon become scarcer in Brazil.

Calls made to two Itau BBA spokesmen in Sao Paulo were not immediately answered. Itau Unibanco, the unit’s parent holding company, is Brazil’s largest nongovernmental bank.

Credit growth is slowing in Brazil after the central bank raised interest rates and made it more restrictive for lenders to extend new loans. In recent weeks, banks have shifted from consumer lending to corporate credit as part of the central bank measures aimed at thwarting the former.

($1=1.617 reais)

Reporting by Guillermo Parra-Bernal; Editing by Phil Berlowitz

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