Forget US bonds, this is the play now: Pimco CIO

The recent slide in United States Treasury yields has led many investors to seek out higher returns elsewhere. With yields reeling and a Federal Reserve interest rate hike potentially on the horizon, Pimco has sought out greener pastures, as well, Mark Kiesel, the firm's chief investment officer for global credit, said on Friday.

"These yield levels are so low with the U.S. economy improving that ultimately we think [rates are] going to be headed higher," Kiesel told CNBC's " Street Signs " on Friday.

Yields on the benchmark 10-year U.S. Treasury note (U.S.:US10Y) inched over 1.81 percent on Friday after five straight sessions of losses. The 10-year yield has nosedived more than 15 percent in 2015.

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As economic trends indicate the 10-year and other U.S. Treasurys could tank even lower, Pimco has shied away from U.S. bonds.

"It's going to be very difficult to get 4 or 5 percent in the bond market unless you buy bank loans or unless you buy emerging market bonds," Kiesel said.

Kiesel has looked to bank loans tied to companies with a strong consumer outlook. He cited MGM (MGM) and Hilton (HLT), in particular, as companies "doing very well" that could yield a return preferable to the U.S. Treasury market.

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He also discussed the Pimco Total Return Fund (NASDAQ:PTTAX-O), which suffered through a dismal 2014 marked by record outflows. The fund has started to recover since September and has outperformed most of its competition since, Kiesel said.

The fund currently favors international markets, like Brazil and Mexico, and Treasury Inflation-Protected Securities, which the firm believes are "very cheap."