To determine the optimal extent to which Electricite de France (EDF) should rely on hybrid bonds in its capital structure, we must evaluate the company's financial profile, the macroeconomic environment, and standard corporate finance principles. 1. **Financial Health & Capital Intensity:** EDF is a highly capital-intensive utility company with massive non-current assets (over €260 billion) and substantial decommissioning provisions. In 2022, the company suffered significant operational challenges leading to a steep net loss (-€18.2 billion) and a negative EBITDA (-€4.9 billion). While EDF does have some existing perpetual subordinated bonds (as evidenced by payments and redemptions in its cash flow statement), these instruments are typically used to protect credit ratings rather than acting as a primary, foundational component of the capital structure. 2. **Cost of Capital & Market Environment:** The provided market data shows rising swap curves and an increasing Sub-Senior Delta for Non-Financial Investment Grade bonds (reaching 2.295% in 2022). This implies that the premium demanded by investors to hold subordinated or hybrid debt over senior debt has widened considerably. Issuing hybrid bonds in an environment of rising interest rates and widening credit spreads is highly expensive, particularly for a company experiencing severe operating losses and negative cash flows. 3. **Standard Capital Structure Theory:** In standard optimal capital structure theory (such as the Trade-Off Theory), the primary components are standard equity and senior debt. For non-financial corporations, hybrid bonds are considered niche instruments used opportunistically for rating agency equity credit, not a core pillar of the targeted long-term capital mix. Given the high cost of subordinated debt in 2022 and EDF's distressed operating performance, relying on hybrid bonds for a large portion of the capital structure would unnecessarily inflate the Weighted Average Cost of Capital (WACC) and increase financial distress risk. Therefore, a theoretical optimization model for a non-financial corporation's capital structure would allocate 0% weight to hybrid bonds, relying instead on senior debt and equity (or, in EDF's real-world case, state-backed capital injections). 0%