REN is a regulated energy-network utility with large, stable concession assets and predictable cash flows, which generally supports relatively high leverage and can make hybrid bonds useful because rating agencies may grant partial equity credit while coupons are usually tax-deductible.

However, the case for relying heavily on hybrids is limited:

- Leverage is already material: liabilities were about €4.93bn versus equity of €1.52bn at 2022 year-end, so liabilities/equity were roughly 3.25x.
- Reported borrowings were about €2.33bn, giving debt-to-capital of roughly 61%, before considering the special transitional gas regime asset/liability gross-up.
- Profitability and cash generation are solid: 2022 net profit was €111.8m and operating cash flow was €613.5m, but financing cash flow was strongly negative and dividends were significant.
- Interest-rate conditions deteriorated sharply in 2022: 5Y, 7Y and 10Y swap rates moved from near zero/negative levels in 2021 to around 1.7%–1.9% in 2022, and investment-grade credit spreads also widened. This makes new long-dated or subordinated hybrid funding more expensive.
- Hybrid bonds are more costly than senior debt because of subordination and optional coupon features, so using them as the dominant funding source would be inefficient unless equity credit is urgently needed.
- The company’s regulated, infrastructure-like profile supports some hybrid issuance to preserve ratings and diversify funding, but not a majority reliance.

Given this balance, a moderate allocation is appropriate: enough to gain equity-credit/rating benefits and funding flexibility, but not so much that expensive subordinated debt dominates the capital structure.

<answer>25%</answer>