For investors hungry for return in a low-yield world, bond fund giant PIMCO sees big opportunity in credit right now.

PIMCO global credit CIO Mark Kiesel told CNBC's "Power Lunch" Thursday the outlook for developed credit markets, and in particular, the U.S. credit market, remains "constructive."

"We do not see a recession, we actually see the U.S. economy doing well," said Kiesel. "The economic expansion will likely keep defaults low. In the U.S. a real rate of 2.25 to 2.75 percent economic growth is not too hot or cold, and credit spreads are near the sweet spot."

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Kiesel said credit spreads look very appealing relative to historical levels, especially in light of today's economic growth rate.

"Higher interest rates should tighten credit spreads," said Kiesel. "Higher yields for corporate bonds in the context of a range-bound equity market should result in an asset allocation shift out of equities and into corporate bonds."

In particular, Kiesel is bullish on bank loans, which perform well because the "all-in coupon" rises as rates increase.

"Credit spreads are attractive at today's valuations," said Kiesel. "We recommend buying cash corporate bonds and new issues to selectively gain exposure right now to the credit markets."

Kiesel's top sectors in the credit markets include housing and housing-related industries, consumer, telecom, health care, banks and financials.

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Kiesel co-manages PIMCO's Total Return Bond Fund, the world's largest actively managed bond fund, with a four-star rating from Morningstar.