NEW YORK, Feb 18 (Reuters) - Standard & Poor's on Wednesday cut its ratings on BCBG Max Azria Group to a deeply speculative grade and cited concerns that the fashion retail chain may trip its debt covenants and struggle to make a $20 million loan payment due in March.

"We are very concerned with BCBG's liquidity position," S&P said in a statement. The company had $20 million available in cash and its revolving credit line in early January, however it also has a $20 million loan payment due in March, S&P said.

Declining sales at Max Rave, which BCBG acquired in 2006, is also likely to push the subsidiary to break minimum earnings before interest, taxes, depreciation and amortization (EBITDA) terms in its loan agreements, S&P said.

"We do not expect Max Rave to meet its minimum EBITDA covenant," S&P said. "This does not constitute an immediate event of default but could prove distracting for management."

"The 2006 acquisition of the Max Rave business added to the company's business risk and it continues to underperform because of negative sales trends," S&P added.

S&P cut BCBG's ratings one step to "CCC-plus," seven steps below investment grade, and gave the company a negative outlook, indicating an additional downgrade may be likely over the next one-to-two years.

"The ratings on BCBG reflect its participation in the highly competitive and fragmented apparel retailing industry, weak performance by its Max Rave subsidiary, a very highly leveraged structure that results in thin cash flow protection measures, and our expectation that the company is vulnerable to nonpayment of its obligations," S&P said.

(Reporting by Karen Brettell; Editing by Diane Craft)