Pacific Investment Management Co. is selling financial debt following a rally that the world’s largest bond-fund manager predicted.

“Because the valuations have changed, we’re no longer as excited about the return prospect,” Mark Kiesel, global head of corporate bond portfolios at Pimco said, in an interview at Bloomberg headquarters in New York.

U.S. bank bonds have outperformed the broad investment-grade corporate bond market this year, returning 13.7 percent compared with a 9.9 percent gain, Bank of America Merrill Lynch index data show. Kiesel wrote in a July 2011 report entitled “Sunlight on U.S. Banks” that the debt of those lenders would gain because of deleveraging and stronger global banking regulations.

“The rally in financial debt is mostly over,” Kiesel said in an interview on Bloomberg Television’s “Market Makers” with Scarlet Fu and Stephanie Ruhle. “We’re taking profits; we’re reducing our exposure overall.”

The fund manager is replacing bank debt with that of homebuilders as the number of houses for sale declines and buyers aren’t as concerned that prices will fall further, Kiesel said. Other growth sectors include emerging-market banks and pipeline companies, which are benefiting from increased oil production, he said.

“The energy sector to me is one of the greatest opportunities for investors in the next three to five years,” Kiesel said.

Banks in Brazil, Mexico, and Peru are more likely to generate earnings growth because loans make up a smaller percent of these economies and the lenders tend to be highly capitalized, Kiesel said.

“When you look at the relative value, the emerging market banks in these countries look very cheap,” Kiesel said. “While the U.S. banks have rallied significantly, the emerging-market banks look very compelling from a valuation perspective.”