To assess ERG S.p.A.’s suitability for issuing hybrid bonds, I’ll focus on factors that matter for hybrid instruments: - **Financial strength and stability** – Hybrids suit companies with predictable cash flows, moderate leverage, and ability to service subordinated debt. - **Profitability and growth** – Recurring operating earnings that comfortably cover interest. - **Capital structure** – Subordination risk and existing debt. - **Asset base and cash flow visibility** – Long-term, tangible assets with steady returns. **Key observations from the data:** 1. **Revenue growth**: Revenue increased from €601m to €714m (~19% growth), showing business expansion. 2. **EBITDA**: EBITDA grew from €397m to €499m (~26% growth), indicating strong operating performance. 3. **Profit from continuing operations**: Slight increase from €86m to €89m — stable but not spectacular. 4. **Net profit surge**: Mainly driven by discontinued operations (€294m vs €88m) — this is one-off and not representative of recurring cash generation. 5. **Cash flow from operations**: Strong rebound to €459m from €177m (but 2021 included negative discontinued ops cash flow). 6. **Interest coverage**: Finance costs fell sharply (€219m to €112m), and finance income/cost improved. EBIT covers interest costs well. 7. **Leverage**: Total equity increased from €1,569m to €2,055m, while total liabilities decreased significantly (€4,435m to €3,172m), so leverage is improving. 8. **Asset base**: Heavy in tangible assets (PPE ~€2.1bn, service concession rights ~€956m), giving a solid collateral base. 9. **Dividends**: Per share dividend increased from €0.75 to €0.90, indicating confidence. **Why suitable for hybrid bonds:** - Stable, regulated or contracted renewable energy cash flows. - Large asset base and improving credit metrics. - Diversified geographical operations. - Strong EBITDA-to-interest coverage. There’s enough evidence of financial soundness and cash flow reliability to support hybrid issuance. Strongly Suitable