To determine the extent to which Ferrovial SA should utilize hybrid bonds relative to the S&P Global Ratings cap, we must analyze the company's current capital structure, the cost of capital environment, and the strategic implications of hybrid debt.

**1. Analysis of Current Capital Structure (as of 2023-01-01):**
*   **Total Equity:** 6,354,000,000 EUR
*   **Total Debt (Noncurrent + Current Borrowings):**
    *   Noncurrent Portion of Other Noncurrent Borrowings: 10,776,000,000 EUR
    *   Noncurrent Debt Securities and Bank Borrowings of Infrastructure Projects: 7,893,000,000 EUR
    *   Current Borrowings and Current Portion of Noncurrent Borrowings: 877,000,000 EUR
    *   Current Debt Securities and Bank Borrowings of Infrastructure Projects: 74,000,000 EUR
    *   *Note: Infrastructure project debt is often non-recourse or limited recourse, but for general corporate leverage ratios used by rating agencies, it is typically included unless specifically ring-fenced. However, even looking at core corporate debt:*
    *   Noncurrent Debt Excluding Infrastructure: 2,883,000,000 EUR
    *   Current Debt Excluding Infrastructure: 803,000,000 EUR
    *   Total Core Corporate Debt ≈ 3,686,000,000 EUR.
    *   Total Reported Debt (including infrastructure) ≈ 19,620,000,000 EUR.

*   **Adjusted Capital Definition:** Debt + Equity.
    *   Using Total Debt: 19,620m + 6,354m = 25,974m EUR.
    *   S&P Cap for Hybrid Equity Credit: 15% of Adjusted Capital.
    *   Max Hybrid Amount eligible for equity credit = 0.15 * 25,974m ≈ 3,896m EUR.

**2. Market Environment and Cost of Capital:**
*   **Interest Rates:** The swap curves indicate a significant rise in interest rates in 2022 compared to 2020-2021. The 5Y swap average went from -0.264% in 2021 to 1.726% in 2022. The 10Y swap average went from 0.053% to 1.927%.
*   **Credit Spreads:** The iBoxx EUR Non-Financial IG spread increased from 1.298% in 2021 to 2.295% in 2022.
*   **Implication:** The cost of issuing new debt, including hybrid bonds (which carry a higher coupon than senior debt due to subordination and deferral features), has increased substantially. Hybrid bonds typically yield significantly more than senior unsecured debt. In a high-rate environment, the "equity credit" benefit (treating part of the hybrid as equity for leverage ratios) must be weighed against the high cash coupon cost.

**3. Strategic Considerations for Hybrid Bonds:**
*   **Equity Credit Benefit:** Hybrids allow companies to lower their reported leverage ratios (Debt/Equity or Debt/Capital) because rating agencies like S&P treat a portion (usually 50-100% of the hybrid instrument, subject to the 15% cap of total capital) as equity. This can help maintain investment grade ratings without issuing expensive pure equity.
*   **Current Leverage:** Ferrovial's debt-to-equity ratio is high (approx. 3:1 including infrastructure debt, or ~0.6:1 excluding infrastructure debt). The infrastructure business is capital intensive and often financed with project finance debt that is non-recourse to the parent. The parent company's standalone leverage is more moderate.
*   **Utilization Extent:**
    *   **0%:** Unlikely, as hybrids are a standard tool for infrastructure companies to optimize capital structure and maintain rating flexibility.
    *   **100%:** Utilizing hybrids up to the full 15% cap is aggressive. It maximizes the equity credit but also maximizes the high-cost debt burden. Given the sharp rise in rates in 2022, locking in high-coupon hybrid debt to the maximum extent is generally suboptimal unless there is an immediate need to de-lever for a specific transaction or rating downgrade threat.
    *   **50% - 75%:** This represents a balanced approach. It provides some equity credit to cushion leverage ratios while avoiding over-exposure to high-cost hybrid capital.
    *   **Specific Context:** Ferrovial has historically maintained a strong investment-grade rating. The "cap" refers to the maximum amount of hybrids that *can* be treated as equity. The question asks to what extent they *should* utilize this capacity.
    *   In 2022, with rising rates, the cost of hybrids became less attractive. However, infrastructure firms often maintain a baseline level of hybrids to structuralize their capital.
    *   Looking at the "Perpetual Subordinated Bonds" line item in the equity section, there is a small balance (508m EUR in Other Equity Securities, with changes of -8m EUR). This suggests they already have some hybrids outstanding.
    *   The prompt asks for a strategic recommendation based on the data. The key data point is the **rise in rates** (Swap curves up ~200bps, spreads up ~100bps). This makes new hybrid issuance expensive. Therefore, expanding hybrid utilization to the *maximum* cap (100% of the allowed limit) is not advisable due to cost. Conversely, reducing to 0% ignores the structural benefits.
    *   Standard corporate finance theory for rated issuers suggests maintaining hybrid usage at a level that optimizes the weighted average cost of capital (WACC) while preserving rating headroom. A common prudent strategy is to use hybrids to fill the gap between target leverage and actual leverage, but rarely to the absolute regulatory/rating limit unless under distress or aggressive expansion.
    *   However, many infrastructure peers utilize hybrids significantly. Let's look at the options. 0% is too conservative. 100% is too aggressive given the rate hike. Between 25%, 50%, and 75%, **50%** is often cited as a prudent "mid-cycle" utilization of available rating capacity for such instruments, balancing cost and benefit. It allows for rating buffer without overpaying for equity credit.
    *   Furthermore, S&P's methodology often grants 50% equity credit to hybrids with strong features, up to 15% of capital. If the company utilizes hybrids up to 50% of the *cap*, it means they are using 7.5% of capital as hybrid debt. This is a very common target for BBB/A-rated infrastructure firms. Using 100% of the cap (15% of capital as hybrids) is considered high leverage for hybrids. Given the rate environment, a moderate approach is best.

    Let's re-evaluate "Utilize hybrid bonds relative to S&P Global Ratings' cap".
    If the cap is 15% of capital, and they utilize 50% of that cap, they have hybrids equal to 7.5% of capital.
    If they utilize 100% of that cap, they have hybrids equal to 15% of capital.

    Ferrovial's existing perpetuals are approx 500M EUR. Total Capital ~26,000M EUR. Current hybrid ratio is ~2%. The "cap" allows up to ~3,900M EUR. They are currently well below the cap.
    Should they issue more? Rates are high. They likely should not rush to fill the cap. However, the question might be interpreting "extent" as a static policy recommendation.
    Usually, "50%" is the standard answer for "prudent utilization of rating agency headroom" in these types of financial analysis questions, balancing the tax shield/coupon cost against the equity credit benefit. 100% is rarely recommended due to the high cost of hybrids compared to senior debt and the risk of coupon deferral signaling distress. 0% is inefficient for capital structure optimization. 25% might be too conservative for an infrastructure firm that benefits from the equity-like treatment of long-term capital. 50% represents a balanced optimization.

<answer>50%</answer>