While the loss of Warren Buffett’s treasured AAA credit rating for Berkshire Hathaway may be shocking to many, it’s actually just the latest development in a long-term trend towards weaker corporate credit.
That’s because according to Standard & Poor’s, while there were 60 non-financial U.S. companies with AAA-ratings back in the early-1980s, there are only four now — Automatic Data Processing, Exxon, Johnson & Johnson, and Microsoft. Only 18 financial companies have AAA-credit.
Developed sovereign nations appear to be following a similar trend as well, as shown by this chart from Moody’s:
All nations here save Switzerland are diving towards the purple, non-AAA, zone. The death of AAA-ratings says much about how the world has become a far more leveraged place than it was before.