Ørsted should be advised to use hybrid bonds to a **moderate-to-high extent**, but not up to the full S&P equity-credit cap.

Key considerations:

- **Existing and recent hybrid usage is a strong positive signal.** Ørsted already has substantial hybrid capital outstanding: **DKK 19.8bn at year-end 2022**, up from DKK 18.0bn, and it issued hybrid capital in both 2021/2022. Its first hybrid issuance dates back to 2005, so hybrids are an established part of its capital structure rather than an opportunistic or unfamiliar instrument.

- **Current hybrid share is already meaningful.** Using a simple capital base of equity plus borrowings/lease debt, hybrid capital is already around the mid-to-high single digits of adjusted capital. That suggests the company is already using hybrids near a prudent recurring level, but still below S&P’s **15% total adjusted capital cap**.

- **Credit metrics are sound but capital needs are material.** S&P net debt/EBITDA of **2.5x** and FFO/net debt of **31.2%** indicate a solid investment-grade profile. Moody’s adjusted leverage trend is also improving. However, Ørsted is highly capital-intensive: purchases of PPE and intangibles were **DKK 33.0bn** in 2022, while operating cash flow was only **DKK 11.9bn**, leaving heavy reliance on disposals and financing. Production assets and construction in progress remain very large, consistent with ongoing offshore wind and renewables investment needs.

- **Leverage and funding pressure exist, but not enough for the maximum.** Long-term borrowings rose sharply from **DKK 31.5bn to DKK 60.5bn**, although short-term borrowings fell. The group also has large derivative and collateral-related cash-flow swings, which add liquidity and balance-sheet management complexity. Hybrid issuance can usefully preserve rating headroom, but there is not clear evidence of imminent downgrade risk or a transformational financing need that would justify moving to the full **15%** cap.

- **Business profile supports investment-grade access.** Ørsted operates across multiple developed markets and has a strong renewables platform. It is primarily exposed to unregulated power/gas and renewables rather than fully regulated utilities, so earnings can be more market-sensitive, but long-term contracted renewable assets and policy support provide some stability.

- **Hybrid cost is less favorable than in 2020-2021.** Swap rates and corporate yields rose materially in 2022, so new hybrids would be more expensive than the existing low-rate-period issuance. This argues against maximum use. Still, given Ørsted’s established hybrid market access and capital-intensive growth plan, moderate additional issuance remains justified.

Overall, Ørsted should not be advised to issue **0%** or only **3.75%**, because it has recurring capex needs and a demonstrated strategic use of hybrids. But **11.25% or 15%** would be too aggressive given improving leverage metrics and no clear evidence that rating preservation is strongly dependent on further hybrid support. The most balanced recommendation is therefore **7.5% of total adjusted capital**.

<answer>7.5%</answer>