* Countries to guarantee 120 percent of their share of loans
* Intention is to secure highest rating for the debt
* Aim is also to ensure creditors can be paid off
By Jan Strupczewski
LUXEMBOURG, June 7 (Reuters) - Countries setting up an emergency loan company for the euro zone will each guarantee 120 percent of their share of the loans to secure the highest rating for the debt, euro zone officials said on Monday.
By providing more than 100 percent of the loan guarantees, euro zone countries hope to ensure that creditors can still be paid off if one or more country runs into financial problems and is unable to make good on its guarantees.
The company is called the European Financial Stability Facility (EFSF) and is part of efforts to prevent other countries that use the euro suffering similar problems to heavily indebted Greece.
European Commission spokesman Amadeu Altafaj said after talks between euro zone finance ministers in Luxembourg that the ministers expected it to secure a AAA credit rating.
"Ministers have agreed on a number of measures to ensure the best possible credit quality and rating for the debt instruments issued by EFSF," the ministers said in a statement.
The statement said the measures included "a 120 percent guarantee of each Member State's pro rata share for each individual bond issue and the constitution, when loans are made, of a cash reserve to provide an additional cushion or cash buffer for the operation of the EFSF."
"Member States have agreed that other mechanisms would be adopted if needed to further enhance the creditworthiness of the bonds or debt securities issued by the EFSF," it said.
The company, a special purpose vehicle (SPV), will be a limited liability company operating under Luxembourg law that will be able to borrow up to 440 billion euros ($525.4 billion) on the market by issuing bonds guaranteed by euro zone states.
Altafaj said that since the bonds would be guaranteed by the euro zone, it would be fair to call them eurobonds.
"The facility will be operational as soon as countries representing 90 percent of shareholdings have completed their national procedures, which is expected is the course of June," Jean-Claude Juncker, the chairman of the group of euro zone finance ministers, told a news conference.
"The recruiting process for the CEO of the facility has begun and he or she will be nominated very shortly, in the coming days, along with the chairman of the board," he said.
European Economic and Monetary Affairs Commissioner Olli Rehn said the SPV would be run by a board of directors -- the same people who represent euro zone countries in the economic and financial committee that prepares ministers' meetings.
The European Commission, the EU executive, will contribute to the management of the SPV and, together with the European Central Bank, assess requests for aid from the facility and set conditions for it.
The European Investment Bank said it was ready to provide treasury management services and administrative support to the company through a service level contract.
"The EIB's role would be similar to the back office support it provides already to a number of trust and other funds set up by the Commission and Member States," the bank said.
(Editing by Timothy Heritage)