Let’s go step-by-step. --- **1. Understanding the S&P cap on hybrids** S&P caps the equity credit from hybrid bonds at **15% of total adjusted capital** (debt + equity). So we are being asked: how much of that 15% limit should the company actually use? Options: 0%, 25%, 50%, 75%, or 100% of that cap. --- **2. Company’s capital structure (end of 2022)** - Equity: €4,467m - Non-current financial liabilities: €5,867m - Current financial liabilities: €1,022m - **Total debt** (financial liabilities, excluding operating): ~€6,889m - Total adjusted capital = €4,467m + €6,889m = **€11,356m** 15% cap = **~€1,703m** in hybrid equity credit. --- **3. Leverage — does the company need to protect its rating?** Debt/equity = €6,889m / €4,467m ≈ **1.54x**. That’s moderate for a utility, but leverage increased significantly from 2021 (debt was ~€5,068m; equity was €4,303m → D/E ≈ 1.18x). Hybrids would add more debt-like instruments, but with equity credit they could help slow leverage deterioration. --- **4. Market conditions — cost of hybrids vs. straight debt** Interest rates rose sharply in 2022: - 5Y swap: from -0.264% (2021) to 1.726% (2022) - 10Y swap: from 0.053% to 1.927% - Subordinated (non-financial IG) spread: average 2.295% in 2022 vs. 1.298% in 2021. Hybrid issuance costs are now much higher — and the subordinated spread widened significantly. This makes hybrid issuance **less attractive** unless the company is under rating pressure. --- **5. Profitability and cash flow** - EBITDA: €1,505m (up from €1,428m) - Operating cash flow: €1,260m - Free cash flow: **€118m** (improved from -€460m) — still quite low relative to debt. Coverage metrics are decent but not strong enough to suggest aggressive hybrid usage. --- **6. Conclusion** Given high hybrid costs in 2022, adequate (but tightening) credit metrics, and no obvious immediate rating need, **partial usage** of the 15% cap might be reasonable for flexibility — but not full. Mid-range utilization (50%) seems appropriate: some equity credit benefit without locking in very expensive subordinated debt for the full allowed amount. --- **Final Answer:** 50%