The China Evergrande Centre is in Hong Kong.
Most institutions remained silent as China Evergrande failed with hardly a ripple in markets.
Evergrande had not confirmed payment of its latest debt obligation, which led to a default. The developer's shares were down Friday. The index dropped by 2%.
Over the summer, investors were worried about the spillover of China's economy after learning of Evergrande's problems. The company has a total of $300 billion in liabilities, with $19 billion in offshore U.S. dollar-denominated bonds.
Evergrande made eleventh-hour interest payments to stay afloat.
"We should have been calling this a technical default for a long time already, but nobody dared."
There is no pressure on China to make it clear. Ratings should be pushing. Some investors pushed. They don't want to be labeled because they don't want to pay the consequences. Everybody is trying to increase what they can get out of it.
The company can restructure its debt at a lower cost if it doesn't put the official default label on it.
S&P Global Ratings did not have a statement as of Friday afternoon, and referred CNBC to its report that said "default looks inevitable for Evergrande." Moody's did not respond to a request for comment.
Evergrande did not respond to CNBC's request for comment.
The ratings agency assumed that two interest payments were not made before the grace period ended. The developer has not yet ceased operations, or even begun formal procedures such as filing for bankruptcy, which is why the rating was lowered to restricted default.
Chinese authorities have made public statements in the last week about efforts to manage the developer's situation.
Evergrande warned in a filing that it could not guarantee it could meet its financial obligations and that it would engage with offshore creditor about debt restructuring. The company said that it was forced to pay $260 million.
The local government in Guangdong province said it met with Evergrande's founder. The province sent a working group to the company.
Yi Gang, head of the People's Bank of China, said in a speech Thursday that Evergrande's situation is a market event to be handled according to market principles and law.
The Evergrande situation is an extremely healthy development because there needs to be a precedent for companies to restructure their liabilities for it to be a functioning credit market.
Moody's says that real estate and related industries account for 25% of China's economy.
The ability of Evergrande to complete apartments that it has already sold to consumers is more important than anything else. She thinks that with Beijing's help, there will be a long, drawn-out impact on growth.
She said that spillover is limited because Evergrande's debt is mostly held by high net worth individuals.
