A debt for equity swap is in the works for the lenders to Babcock & Brown, though the terms and timing are still in the course of negotiation and may not be resolved until some time in 2009.B&B yesterday confirmed that banks agreed to advance a further $150 million, with this new loan ranking ahead of all other debt, and paying six percentage points over the bill rate. The infrastructure investment firm plans to apply most of the proceeds to select developments with decent prospects of a sale. The firm must also agree a new business plan with its bankers by early January, having outlined a new, but apparently unacceptable plan to the market less than four weeks ago.B&B will pay interest on more than $3 billion in other senior debt on a pay-as-you-can basis and will freeze interest payments on around $600 million in subordinated debt.While on debt for equity swaps, National Australia Bank, along with four other British-based banks, will swap £240 million debt for 75 per cent of the equity of London money manager New Star Asset Management. NAB's share of this debt for equity swap is unclear.