B&B will pay interest if it can

Babcock & Brown won agreement from its bankers to pay interest for its $3.25 billion in senior debt on a "pay-if-you-can" basis, providing it with an optional interest holiday, the Financial Times reported.

B&B also secured agreement from its bankers to suspend covenants on its current loans.

The FT reported that B&B will pay a six per cent margin over Australia's 30-day bank bill rate on $150 million in bridging finance that's at the centre of the latest negotiations with its banks.