Let’s work through this step-by-step. --- **1. Current hybrid capital relative to total adjusted capital (end-2022)** - Hybrid capital: EUR 2,125 million - Equity (including hybrids & non-controlling interests): EUR 7,713 million - Long-term borrowings: EUR 19,006 million - Short-term borrowings: EUR 709 million Total adjusted capital (debt + equity) = EUR 7,713m + EUR 19,006m + EUR 709m = **EUR 27,428 million** Current hybrid as % of total adjusted capital: 2,125 / 27,428 ≈ **7.75%** --- **2. S&P cap** S&P’s 15% cap means the maximum equity credit from hybrids is 15% of total adjusted capital. 15% × 27,428 ≈ **EUR 4,114 million** Current hybrids (2,125m) are well below the cap. --- **3. Profitability and leverage context** - Company has been making losses (net loss EUR 879m in 2022, EUR 340m in 2021) - Interest costs rose from EUR 202m to EUR 300m - Large capex program (EUR 4.4bn in 2022), partly debt-funded - Long-term borrowings jumped from EUR 12.4bn to EUR 19.0bn - Equity injection of EUR 1,230m in 2022 The losses and rising debt suggest the company needs external capital but should avoid excessive senior debt to protect ratings. --- **4. Optimal hybrid utilization** Given the need for capital, the desire to maintain credit metrics, and the fact they are well below S&P’s 15% limit, it makes sense to use hybrids to some degree. However, given the existing losses—which reduce the ability to service hybrid coupons from profits—they should not max out the limit but use hybrids meaningfully. A **75% utilization** of the 15% cap would mean hybrid capital of ~EUR 3,086m (increase of ~EUR 961m vs current), providing a cushion without over-reliance. --- **5. Final reasoning** - 0% or 25% would underutilize a valuable financing tool. - 100% may strain coverage ratios in loss-making years. - 75% is an aggressive but still prudent use of the S&P allowance given growth pressure. --- 75%