By Jan Strupczewski
BRUSSELS, June 11 (Reuters) - Bonds that could be issued by the euro zone's special-purpose vehicle to raise cash for countries in trouble would not have preferred status, a euro zone source said on Friday.
Market participants have been wondering whether bonds issued by the SPV, guaranteed by euro zone countries, would have a status senior to other government paper.
Such a status would ensure the bonds have to be repaid before other debt, making them more attractive to the market and boosting their price.
"The bonds will have no preferred creditor status," the euro zone source, with insight into the SPV, said.
This is the same arrangement as with bilateral loans of countries from the 16-nation euro zone to Greece, which could total up to 80 billion euros ($96.3 billion) over three years, and which have no preferred status either.
The source also said there were no particular limits on which maturities the SPV could issue.
"Everything is possible, including long-term bonds," the source said.
The company, called the European Financial Stability Facility (EFSF), is likely to become fully operational at the end of June. It will be able to borrow up to 440 billion euros on the markets to help any euro zone members no longer able to finance themselves sustainably on the market.
This is an arrangement separate from the Greek rescue package.
Euro zone finance ministers have chosen Germany's Klaus Regling, a former director-general of economic affairs in the European Commission, to be chief executive of the Luxembourg-registered EFSF.
Regling will take office on July 1, said Guy Schuller, spokesman for Luxembourg Prime Minister Jean-Claude Juncker.
Regling, who has also worked for the German Finance Ministry and the International Monetary Fund, will prepare and chair meetings of the EFSF's board of directors from its euro zone shareholders, but will not vote, the euro zone source said.
Should the EFSF issue bonds, Regling would play a key role in organising and managing the issue. He will also manage the small staff of the SPV and represent the company externally.
The German finance agency will execute the treasury activities of the SPV, and the European Investment Bank would provide back-office services. (Reporting by Jan Strupczewski, editing by Dale Hudson)