Privately owned Macrolink, which has a range of businesses including property development and tourism, failed to pay investors principle and interest on 1 billion yuan ($144 million) worth of five-year bonds due March 6, the Shanghai Clearing House said in a statement on its website.

Macrolink's Shenzhen-listed subsidiary said in an exchange filing on Friday that its parent's business "has been hit hard by the coronavirus epidemic."

The outbreak has frozen home sales, choked retail sales and caused the shutdown of industrial activities in China.

The first default in the industry comes as bigger developers are rushing to sell bonds to refinance their debts, taking advantage of lower yields as Beijing pumps liquidity and cuts interest rates to aid a struggling economy.

China has urged banks not to cut or call back loans for virus-hit companies, and has encouraged lending toward smaller companies. Regulators have given fast-track approval for "virus bonds" to support companies whose finances have been hurt by the virus.

Macrolink has, however, had funding difficulties as Beijing launched a deleveraging campaign a few years ago to reduce debt in the economy, with the pain most felt by private-run companies, its subsidiary, Macrolink Culturaltainment Development Co, said.

As a result, Macrolink's liquidity condition is "extremely tight". The company is actively negotiating with bond investors, and is seeking various ways to raise money to ease the liquidity shortage, according to the filing.

Macrolink faces repayment obligations for 3 billion yuan worth of bonds that would mature, or be sold back to the issuer over the next three months, rating agency Golden Credit Rating said in mid-January.

Chinese developers, including Greentown, Binjiang Real Estate and Gemdale Corp raised 36.3 billion yuan selling onshore bonds in February, a jump of 50% from a year ago, according to estimates by Huatai Securities.

A survey by brokerage CLSA found that 53% of people who had planned to buy property prior to the virus outbreak will delay buying to 2021 or after, while 5% will forgo their buying plans.

The coronavirus already impacted Chinese property sales in January, which were down 15%-18% year-on-year in tier 1 and tier 2 cities, while February sales "will dip deeper as sales managers reported zero foot traffic and over 90% sales declines" since the Chinese New Year, CLSA said in a February 27 report.

On Friday, Hong Kong-listed Chinese developer Country Garden Holdings reported a 50% slump in February contracted sales.

Larry Hu, economist at Macquarie Capital Ltd, said despite measures by an increasing number of local governments to aid developers, China was unlikely to loosen policy at the central government level, as such a move risks reflating the property bubble.

"Therefore, the Chinese economy will likely face more headwinds from the property sector," in the second half of 2020, he wrote.

(Reporting by Samuel Shen and Brenda Goh; Editing by Elaine Hardcastle)