There are only two companies left with top-notch AAA credit ratings

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Microsoft and Johnson & Johnson don’t have a lot in common, but they happen to be the only members of a very exclusive club. The software firm and consumer goods group are the only private non-financial companies left with AAA credit ratings awarded by Standard & Poor’s.

Yesterday (April 26), S&P downgraded Exxon Mobil’s debt by one notch, to AA+, citing worries about low oil prices, deteriorating cash flow, and rising leverage, among other things. Until then, Exxon had maintained its AAA rating since the 1930s.

As recently as the 1980s, some 60 companies had AAA ratings in the US alone. Elsewhere, companies like Nestlé and Toyota once boasted similarly sterling credit scores. (There are a few other companies that still have AAA ratings today, but they are state-controlled firms in Australia, Hong Kong, and Singapore; Microsoft and J&J are the only properly privately-held, non-financial companies with AAA ratings.)

It’s not that the corporate world is suddenly awash in junk—executives simply no longer see the value in making the sacrifices necessary to maintain a top-notch rating. Borrowing costs don’t necessarily move in lockstep with credit ratings any more, as lenders look to other measures to gauge the creditworthiness of companies.

In fact, when companies compete with debt-laden rivals sponsored by private equity firms, or venture-backed companies without a care in the world about cash flow, keeping an overly conservative balance sheet to satisfy the credit-ratings firms might make for bad business.

And let’s not forget the damage the ratings firms themselves did to the whole notion of AAA ratings, when they awarded them to subprime mortgage securities that turned out to be toxic monstrosities.