A unit of Hawaiian Electric Industries that is under scrutiny for its possible role in the deadly Maui wildfires could end up seeing its municipal bonds slashed to high-yield from investment-grade, according to Barclays Plc muni and ESG strategists.

Hawaiian Electric Co. and its subsidiaries have roughly $500 million in special purpose municipal debt and it’s “quite possible” those bonds could be downgraded to below investment-grade in the near future, reads Barclays’ note out Wednesday. S&P Global Ratings cut Hawaiian Electric Industries to junk earlier this week.

“In that case we might see heavy forced selling from investors that are not able to hold high yield muni debt,” strategists led by Clare Pickering wrote. “If this happens in late August or early September, the secondary market might not be deep enough to absorb heavy selling if it materializes, which might cause outsize price swings.”

The utility’s bonds have plunged since the wildfires. Its investment-grade muni bonds due in 2039 traded at about 63 cents on the dollar on Wednesday. That compares with above 80 cents in the days before the catastrophe, according to data compiled by Bloomberg.

However, the Barclays strategists caution against buying the bonds at the cheaper prices, citing uncertainties and potentially challenging market technicals. “We are waiting for a better entry point,” they wrote.

Like California’s largest utility, PG&E Corp., which filed for bankruptcy in 2019, Hawaiian Electric Co. could decide to seek Chapter 11 protection to deal with its liabilities, the strategists added, albeit noting there hasn’t been any such indication from the company.

They also pointed out that Hawaii doesn’t have inverse condemnation for utilities, meaning utilities would be liable for damages only if they’re deemed negligent, which could take a while to determine.

Hawaiian Electric has come under criticism for not turning off power despite weather forecasters’ warnings that dry, gusty winds could create critical fire conditions. Plaintiffs’ attorneys are focusing on the utility’s equipment as a possible source of ignition.

No official cause has been identified for the fire, which has become the deadliest in the U.S. in more than a century. On August 11, the state’s attorney general said that she was opening an investigation into how authorities responded to the wildfires.