Avianca has been downgraded by US rating agency S&P Global ratings due to refinancing risks and concerns about its deteriorating liquidity position.

S&P lowered the Colombia-based carrier's credit rating from 'B' to 'CCC+' today as well as Its issuer rating which has been lowered from 'B-' to 'CCC'. Both ratings are on negative credit watch, which could portend further downgrades in the future.

"The negative CreditWatch listing reflects a potentially additional downgrade stemming from the uncertainty about the timing and outcome of the company's plan to address its 2020 debt maturities," says S&P.

The company has $550 million of debt maturing in May 2020, and the rating agency is dissatisfied with the length of time it is taking to refinance the deal.

On 2 May, the airline's board of directors authorised management to proceed with a transaction in relation to its outstanding 8.375% 2020 notes.

The credit watch listing will be resolved in the next 90 days, says S&P, adding that it may lower the ratings if the company fails to refinance the 2020 unsecured notes within the next three months.

"We're also revising our liquidity assessment on Avianca to weak from less than adequate, given that we expect the company's sources of liquidity to be sharply lower than its uses in the next 12 months, well below 1.0x, reflecting a wide deficit as a result of its now $550 million short-term debt maturity," says S&P in the report.

On 10 April Avianca's majority shareholder Synergy informed Avianca that it had breached covenants of a 2018 loan from United Airlines that was secured by its shares in the Latin American airline. Weeks later, the carrier announced that chief executive Hernan Rincon would depart the company.

In recent months, the airline trimmed its Airbus orderbook, eliminated less profitable flying and began divesting non-core businesses.

As of 20 December, Avianca is rated 'B' with a stable outlook by Fitch Ratings.