Italgas is a regulated infrastructure utility with large, stable asset base and predictable cash flows, so some use of subordinated/hybrid capital can be appropriate. However, the evidence does not support making hybrids a dominant part of its capital structure.

Key considerations:

- Leverage is already high. Total liabilities were €8.64bn versus equity of €2.39bn at 2023-01-01, implying liabilities/assets of about 78% and debt-heavy capitalization.
- Financial debt is substantial: long-term financial liabilities of €6.40bn plus short-term financial liabilities of €0.14bn, against cash of €0.45bn. Net debt is therefore high relative to EBITDA/operating cash flow.
- Cash generation remains positive but weakened in 2022: operating cash flow fell from €840m to €548m, while investing cash outflow increased to €1.28bn, producing significant external funding needs.
- Interest-rate conditions deteriorated sharply in 2022. The 5Y/7Y/10Y swap averages rose to around 1.7–1.9%, and non-financial IG credit spreads/yields also increased. Hybrid bonds, being subordinated and long-dated, would be materially more expensive than senior debt in this environment.
- The company does have characteristics that support limited hybrid issuance: regulated revenues, positive profitability, sizeable equity base, and investor familiarity with utility hybrid structures.
- But because hybrids are costly and should mainly be used to protect credit metrics or fund growth without full equity dilution, they should supplement—not replace—senior debt and retained earnings.

Therefore, a moderate allocation is most appropriate: enough to gain partial equity-credit and support the balance sheet, but not so much that the company overpays for subordinated capital or weakens financial flexibility.

<answer>25%</answer>