REDEIA should use hybrid bonds only to a **moderate extent** over the next 18 months.

Key considerations:

- **Business risk is supportive.** REDEIA is primarily a regulated electricity transmission/network utility, which usually benefits from stable, predictable cash flows and relatively low business volatility. This supports investment-grade credit quality and reduces the need for aggressive hybrid issuance.

- **Credit metrics are solid and improving, not under acute pressure.** The reported S&P Net Debt / EBITDA of **3.21x** and FFO / Net Debt of **20.63%** are reasonable for a regulated utility. Moody’s adjusted leverage trend is also described as **improving**, which argues against a high hybrid requirement.

- **Liquidity and internal cash generation are strong.** Operating cash flow was about **€1.57bn** in 2022, broadly stable versus 2021. This provides meaningful support for capex, dividends, and debt service.

- **Funding needs are meaningful but not transformational.** Investing cash outflow increased materially to about **€1.64bn**, including capex, financial investments, and group/associate investments. Current financial liabilities remain substantial at about **€1.7bn**, though total financial debt declined during the year. This points to moderate rather than severe refinancing or capex pressure.

- **Existing / recent hybrid issuance is an important positive signal.** The data indicate REDEIA has issued hybrid bonds recently, and prior use of hybrids is a strong indicator that some continued hybrid usage is reasonable. However, the first issuance year is also indicated as 2023, so the starting point does not suggest a long-established or very large hybrid layer that should be rapidly expanded to the S&P cap.

- **Hybrid economics became less attractive in 2022.** Euro swap rates rose sharply in 2022, and subordinated spreads were wider. Hybrid coupons would likely be meaningfully above legacy senior debt costs, so maximizing hybrid issuance up to 15% would likely be expensive unless needed for rating preservation.

- **No evidence of material downgrade risk or transformational M&A.** The company appears to have leverage optimization and rating headroom objectives, but not an urgent need to rely heavily on hybrids to preserve investment grade.

Overall, REDEIA has a credible rationale to maintain or modestly expand hybrid capital because of its regulated utility profile, investment program, refinancing needs, and recent willingness to use the instrument. But improving metrics, manageable leverage, strong operating cash flow, and higher hybrid costs argue against going near the S&P 15% cap.

The most appropriate recommendation is therefore **7.5% of total adjusted capital**: enough to provide meaningful rating flexibility and leverage support, but not an aggressive capital structure shift.

<answer>7.5%</answer>