VINCI should use **hybrid bonds to a moderate extent: 7.5% of total adjusted capital**.

Key considerations:

- **Business profile is strong and diversified.** VINCI has a large transportation infrastructure/concessions base, including airports and roads, alongside contracting activities. Its scale is very large, with 2022 revenue of about **€62.3bn**, and operating profit increased materially to **€6.5bn**. This supports an investment-grade profile and reduces the need for maximum hybrid usage.

- **Credit metrics are solid but not without pressure.** Equity increased from **€24.8bn to €29.4bn**, while gross financial debt remains significant, with noncurrent bonds of **€20.4bn**, other noncurrent borrowings of **€3.2bn**, short-term borrowings of **€6.4bn**, and lease liabilities of about **€2.1bn**. Cash is also substantial at **€12.6bn**, which moderates leverage pressure. Overall, VINCI does not appear to face acute balance-sheet stress, but hybrid capital could still provide meaningful rating flexibility.

- **Funding and investment needs are material.** Operating cash flow was strong at **€9.4bn**, but investing cash outflows were also high at **€5.3bn**, including capex and concession investments, plus acquisitions/investments of around **€2.1bn**. VINCI also paid **€1.9bn** in dividends and spent **€1.1bn** on treasury shares. This points to ongoing funding needs and capital allocation pressure, though not a transformational or distressed requirement.

- **Hybrid issuance would be useful but not essential.** Given the company’s large infrastructure asset base, concession investments, and meaningful debt stack, hybrids could improve S&P-adjusted leverage metrics through equity credit. However, the company’s strong profitability, liquidity, and operating cash generation mean that investment-grade preservation does not appear strongly dependent on hybrids.

- **Market conditions are less favorable than in 2020–2021.** Euro swap rates rose sharply in 2022, with 5-year swaps around **1.73%**, 7-year swaps around **1.81%**, and 10-year swaps around **1.93%**, versus negative or near-zero levels previously. Subordinated spreads also widened. Therefore, hybrid issuance would likely raise average funding costs, arguing against a more aggressive 11.25% or 15% recommendation.

- **Annual issuance constraint supports a mid-level target.** With a maximum suggested issuance pace of up to **€3bn per year**, reaching the full 15% cap over the next 18 months would likely be impractical or unnecessarily aggressive unless VINCI already had a large hybrid base. The facts provided do not indicate meaningful outstanding hybrids as a starting point.

Overall, VINCI has enough investment needs and leverage optimization rationale to justify more than a token hybrid allocation, but not enough financial stress or transformational funding pressure to justify using the full S&P cap. A **7.5% target** best balances rating support, capital structure flexibility, and the higher cost of hybrid capital.

<answer>7.5%</answer>