The China Evergrande Group has been declared in default on its dollar debt by Fitch Ratings. Evergrande is the second largest residential real estate company in China, with more than 1,300 projects in 280 cities.
The US-based rating agency cut the developer's rating to Restricted Default due to non-payment of US$1.2 billion in bond repayments within the grace period, which expired on Monday.
The Chinese firm has the largest amount of debt of any private company in the world - $300 billion, as of June.
The Evergrande saga has been closely monitored in the global markets, as the sheer volume of the company's debt could destabilize the Chinese real estate market and affect other countries.
Earlier this month, the Chinese authorities summoned Evergrande's founder after the firm announced it may be unable to repay its debt. The company pledged to "actively engage" with offshore creditors on a restructuring plan.
Evergrande already missed a deadline in early November to pay off liabilities totaling $82.5 million.
Last month, a major shareholder of Evergrande - the Hong Kong-based Chinese Estates Holdings - slashed its stake in the company by selling about 270 million shares.
The People's Bank of China said in October that Evergrande's problems are an "individual phenomenon" and the risks due to its potential default are "controllable," with the country's real estate sector remaining "healthy."
Two years of the Covid-19 pandemic and other obstacles to growth have slowed the Chinese economy and created an unprecedented recession in the country's real estate market.
Critics say the housing built by Evergrande is unaffordable for most people in the country, and the company is unable to sell what it builds.
China's economy relies heavily on real estate, with some estimates suggesting that annual housing activity accounts for about 29% of China's GDP, which is 10% to 20% more than in most developed nations.
For more stories on economy & finance visit RT's business section