I need to analyze whether HERA S.P.A. should utilize hybrid bonds and to what extent relative to S&P Global Ratings' 15% cap on equity credit from hybrids.

Let me first understand what hybrid bonds are and why companies use them:
- Hybrid bonds are debt instruments with equity-like features (perpetual or very long maturity, deferrable coupons, subordination)
- They receive partial equity credit from rating agencies (typically 50% equity treatment for 50% debt treatment)
- S&P Global Ratings caps the equity credit from hybrids at 15% of total adjusted capital (debt + equity)

Let me calculate Hera's current capital structure and key metrics:

**Balance Sheet Data (as of 2023-01-01, which is end of 2022):**
- Total Assets: 17,118,500,000 EUR
- Total Equity: 3,644,700,000 EUR
- Total Liabilities: 13,473,800,000 EUR

Let me break down the debt:
- Noncurrent Financial Liabilities: 5,689,900,000 EUR
- Current Financial Liabilities: 650,100,000 EUR
- Total Financial Debt: 6,340,000,000 EUR

- Noncurrent Lease Liabilities: 55,100,000 EUR
- Current Lease Liabilities: 21,300,000 EUR
- Total Lease Liabilities: 76,400,000 EUR

- Trade and Other Current Payables: 3,093,100,000 EUR
- Other Current Liabilities: 1,720,000,000 EUR
- Current Derivative Financial Liabilities: 1,347,600,000 EUR
- Noncurrent Derivative Financial Liabilities: 6,300,000 EUR

Let me focus on the relevant debt for adjusted capital calculation. Typically, adjusted capital = debt + equity, where debt includes financial debt.

**Total Adjusted Capital** = Financial Debt + Equity = 6,340,000,000 + 3,644,700,000 = 9,984,700,000 EUR

Or if we use total liabilities: 13,473,800,000 + 3,644,700,000 = 17,118,500,000 EUR (which equals total assets, confirming)

For rating agency purposes, "debt" typically means interest-bearing debt:
- Financial liabilities (noncurrent + current): 6,340,000,000 EUR
- Plus possibly lease liabilities: 76,400,000 EUR
- Total interest-bearing debt ≈ 6,416,400,000 EUR

**Adjusted Capital** = Interest-bearing Debt + Equity = 6,416,400,000 + 3,644,700,000 = 10,061,100,000 EUR

The 15% cap on equity credit from hybrids means:
- Maximum equity credit allowed = 15% × Adjusted Capital = 15% × 10,061,100,000 = 1,509,165,000 EUR

Since hybrid bonds typically get 50% equity credit, to get 1,509,165,000 EUR of equity credit, the company would need:
- Hybrid bonds issued = 1,509,165,000 / 0.5 = 3,018,330,000 EUR

But wait - the question asks what percentage of the cap Hera should utilize, not how much they can issue.

Let me analyze Hera's financial situation to determine optimal hybrid usage:

**Key Financial Metrics:**

1. **Leverage Ratios:**
   - Debt/Equity = 6,340,000,000 / 3,644,700,000 = 1.74x
   - Debt/(Debt+Equity) = 6,340,000,000 / 9,984,700,000 = 63.5%

2. **Interest Coverage:**
   - EBIT (Profit Loss From Operating Activities) = 533,800,000 EUR
   - Finance Costs = 217,200,000 EUR
   - Interest coverage = 533,800,000 / 217,200,000 = 2.46x

3. **Profitability:**
   - Net Profit = 305,300,000 EUR
   - ROE = 305,300,000 / 3,644,700,000 = 8.4%
   - Operating margin = 533,800,000 / (20,082,000,000 + 548,200,000) = 2.6%

4. **Cash Flow:**
   - Operating cash flow before working capital changes = 1,202,000,000 EUR
   - Actual operating cash flow = 35,700,000 EUR (very low due to working capital changes)
   - Free cash flow situation is tight

**Analysis of whether to use hybrids:**

Reasons FOR using hybrids:
1. **High leverage**: Debt/Equity of 1.74x is moderately high; hybrids could improve the equity base
2. **Moderate interest coverage**: 2.46x is adequate but not strong; reducing fixed interest obligations (hybrids have deferrable coupons) provides flexibility
3. **Capital intensive industry**: Utilities/energy infrastructure require significant investment; hybrids match long-term assets
4. **Current market conditions in 2022**: Rising interest rates (swap curves show 2022 rates around 1.7-1.9% vs negative in 2020-2021) - but still relatively low historically

Reasons AGAINST using hybrids:
1. **Weak operating cash flow conversion**: Actual operating CF was only 35.7M EUR due to working capital absorption; hybrids add another cash obligation
2. **Already significant debt**: 6.3B EUR of financial debt is substantial
3. **Dividend payments**: Company pays dividends (219.5M EUR in 2022), which may conflict with hybrid coupon deferral flexibility

**Strategic Considerations:**

- Hera operates in regulated utilities (energy, water, waste) - stable cash flows, capital intensive, suitable for hybrids
- The company has significant working capital needs (inventories increased dramatically from 368M to 995M, receivables increased)
- Credit quality considerations: Using the full 15% cap might be aggressive given the working capital pressures and moderate interest coverage

**Rating Agency Perspective:**
- S&P's 15% cap is a maximum, not a target
- Full utilization (100%) is typically for companies with:
  - Strong investment grade ratings
  - Very stable cash flows
  - High equity cushions already
  - Strong interest coverage

- Hera's metrics suggest moderate credit quality, not strong investment grade characteristics

**Market Context (2022):**
- Rising rate environment makes fixed-rate hybrids less attractive for issuers
- Credit spreads were widening (iBoxx non-financial IG at 2.295% in 2022 vs 1.298% in 2021)
- However, utility sector is defensive

**Optimal Utilization Assessment:**

Given Hera's profile:
- Not strong enough to justify 100% or 75% utilization
- The company has genuine capital needs and moderate leverage
- 50% utilization would provide meaningful equity credit (~750M EUR equity credit, ~1.5B EUR issuance) without maxing out the cap
- This would improve leverage metrics while preserving rating agency headroom
- The 50% level is a balanced approach for a BBB-type credit

However, looking more carefully:
- The operating cash flow is quite weak (35.7M EUR actual vs 1.2B before WC changes)
- The company is absorbing significant working capital
- Interest coverage at 2.46x is only moderate
- The industry is stable but the company-specific cash flow conversion is poor

Given these factors, **25% utilization** seems more appropriate:
- Provides some balance sheet flexibility and diversification
- Doesn't over-commit to a instrument with deferrable coupons that might signal stress if used
- Preserves significant headroom for future needs or stress scenarios
- More conservative given the working capital pressures and moderate coverage

But wait - let me reconsider. The question is about what extent they SHOULD utilize, not what they currently do. From an optimal capital structure perspective:

For a utility with:
- Stable regulated revenues (visible in revenue growth but also cost pressures)
- Need for long-term capital
- Moderate but not strong credit metrics

50% utilization represents a balanced approach:
- Meaningful improvement in credit metrics
- Not so much that it strains cash flow or concerns rating agencies
- Typical for mid-investment grade utilities in Europe

Given the working capital intensity and moderate coverage, I believe **50%** is the most appropriate answer - it provides meaningful capital structure benefits without overreaching given the company's credit profile.

<answer>50%</answer>