SAN DIEGO -- A major Wall Street credit-rating agency lowered the city's bond rating and signaled more downgrades may come, potentially adding millions of dollars to the city's borrowing costs.

Standard & Poor's announced Monday it had downgraded the rating on all city of San Diego general-obligation debt to "AA-," down from "AA." Bonds assigned the AA range by Standard & Poor's are considered "excellent quality."

Investment losses, underfunding dating back to 1996, a pension fund deficit, court settlements and the addition of new employee benefits without the required funding were the key reasons for the downgrade, Standard & Poor's officials said.

Analysts for the agency said an investigation by the Securities and Exchange Commission and U.S. Attorney's office into San Diego's financial disclosures and practices also influenced the decision.

Depending on how the investigation develops, Standard & Poor's will take further rating action if appropriate, agency officials said.

The move comes after Moody's Investor Service, another Wall Street credit-rating agency, downgraded San Diego's financial outlook from "stable" to "negative" due to the city's pension deficit and several other problems.

The $3 billion San Diego City Employees Retirement System has a deficit of more than $1.1 billion, more than $1 billion in unfunded retiree health care costs and owes millions of dollars to retirees in a court settlement.

The city faces more litigation from retirees who say that years of intentional underfunding by the city to free up cash for the budget is illegal.

City officials disclosed in January several errors and omissions have been made since 1996 in financial documents pertaining to the sale of more than $2.3 billion in San Diego municipal bonds.