Pacific Investment Management, home to the world’s biggest bond fund, has turned negative over the government bond markets in Spain and Italy even as rival BlackRock has scooped up the bonds from the debt markets’ spring swoon.

Andrew Balls, head of European portfolio management at Pimco, told The Wall Street Journal in a phone interview on Tuesday that he cut holdings on Spain and Italy after the global bond sell-off kicked off at the start of May. The firm, a unit of Allianz of Germany, is now holding less of the two nations' debt in his portfolios compared to benchmark indices.