Standard & Poor's Corp., a New York credit-rating agency, downgraded its rating of Chicago's general obligation bonds from A-minus to BBB-plus, citing the city's "chronic fiscal stress" and inability to develop a permanent solution to revenue problems.

Although Vladimir Stadnyk, vice president in the agency's municipal finance department, said the drop is "significant," he said a "BBB-plus" rating indicates confidence in the city's fiscal situation and in its having an "adequate capacity to pay interest and principal."

The BBB-plus rating is one step above BBB, the lowest investment grade. Everything below "BBB" is considered by the agency to be speculative for investment purposes.

"We don't see any long-term permanent solution to Chicago's financial problems," Stadnyk said. "We're saying that the political environment, not necessarily the current one, but dating back to 1978, does not permit the city to come up with a permanent solution . . . ."

In a prepared statement, Mayor Harold Washington blamed "the track record and performances of previous administrations" for the reduced rating. "We've made a break with the past, and we're now firmly in position to turn around our financial situation . . . ," he said.