Fitch Ratings has downgraded the long-term debt of Chinese homebuilder Evergrande Group, along with two of its subsidiaries, to restricted default, meaning that the companies have failed to meet their financial obligations.

Fitch has also downgraded Chinese real estate developer Kaisa Group Holdings to the same status.

The proximate cause for both moves was the failure to make payments on some of the companies' debt, which has been anticipated for some time now. Shares in Evergrande, which is listed on the Hong Kong Stock Exchange, have slumped from $1.73 at the beginning of 2021 to 23 cents as of Thursday.

The downgrades merely emphasize that the companies can't pay their debts, not that any kind of formal restructuring is underway yet, though that, too, is anticipated.

The Chinese real estate sector has been in trouble much of this year, leading to worries about the impact on the Chinese economy as a whole, and thus the rest of the global economy.

“An Evergrande collapse, even a managed one, would reverberate through the Chinese economy given the company’s liabilities are equal to 2% of the country's GDP,” Nuveen Real Estate Chief Investment Officer and Head of Funds Management Louise Kavanagh said in a note to clients in September.

Chinese financial regulators are now trying to reassure investors that the fallout from Evergrande's problems can be contained.

"The rights of shareholders and creditors of Evergrande will be fully respected in accordance to their legal seniority," People's Bank of China governor Yi Gang said Thursday in a video speech, as reported by The Wall Street Journal.

"The risk caused by a few real estate firms in the short run would not undermine the market for the medium and the long run,” Yi said.

The PBOC announced on Monday that it would inject $188B into the Chinese economy, apparently to mitigate the impact of the real estate slump.