To assess whether EDP, S.A. is suitable to issue hybrid bonds, we look at its financial profile, credit strength, and capital structure based on the 2022 annual report: 1. **Revenue and Profitability:** The company shows strong revenue growth (reaching 20.65 billion EUR in 2022 from 14.98 billion EUR in 2021). The profit for the period is 1.17 billion EUR, demonstrating consistent earnings capacity. 2. **Cash Flow Generation:** The company has robust operating cash flows (3.78 billion EUR in 2022, up from 2.02 billion EUR in 2021). Strong and positive operating cash flow is a primary requirement for servicing the interest payments associated with hybrid debt. 3. **Capital Structure and Leverage:** The company carries a significant amount of long-term borrowings (15.78 billion EUR) and current borrowings (4.24 billion EUR). The use of hybrid bonds could be a strategic tool to manage this leverage while strengthening the company's equity base (which is 13.83 billion EUR), as hybrid instruments often receive partial equity credit from rating agencies. 4. **Nature of Business:** As a major utility provider involved in the "generation, transmission, distribution and supply of electricity and supply of gas," the company operates with a stable, regulated asset base. Utilities are classic issuers of hybrid bonds due to the predictable nature of their cash flows and their ongoing need for long-term capital to fund energy transition projects (evidenced by the 3.50 billion EUR in payments for property, plant, and equipment). 5. **Financial Stability:** The company maintains a strong liquidity position with 4.90 billion EUR in cash and cash equivalents and has received authorization from its Executive Board for these financial statements, maintaining a "going concern" status. Given the stable utility business model, strong cash flow generation, and the typical alignment between hybrid issuance and utility capital expenditure requirements, the company is well-positioned to leverage such an instrument. Strongly Suitable