Pimco is no longer buying Greek and Portuguese bonds but is buying and holding Italian and Spanish sovereign debt, Chief Executive Mohamed El-Erian tells German weekly newspaper Die Zeit in an interview to be published in Thursday's edition.

"It is important to make a clear distinction between individual countries; Spain isn't insolvent! Italy isn't insolvent!," El-Erian told the newspaper. "If Spain can convince investors that it is making progress in restructuring its banks, it won't need external help."

El-Erian also said European governments should boost their rescue fund prior to asking the international community for financial support. He noted that loans by the International Monetary Fund to Portugal, Greece and Ireland already account for more than 60% of all loans provided by the fund.

He also said the euro zone must take a clear decision on where it's heading in order to prevent a break-up of the currency union.

Pimco is a subsidiary of Allianz SE (ALV.XE).

-Frankfurt Bureau, Dow Jones Newswires; 49-69-29725-500.