To determine the appropriate level of hybrid bonds for Iberdrola S.A., we must analyze its financial metrics, existing capital structure, and the industry context.

1. **Current Capital Structure & Leverage**: 
   - Total Equity (2023-01-01): €58,114M
   - Total Financial Debt: Sum of noncurrent (€44,216M) and current (€25,079M) financial liabilities, minus noncurrent (€3,661M) and current (€3,398M) derivative liabilities, minus lease liabilities (€2,287M + €151M) and other non-financial liabilities. This gives an adjusted debt of approximately €59,798M. 
   - Total Adjusted Capital (Equity + Adjusted Debt) ≈ €117,912M.
   - FFO: Operating Cash Flow (€10,443M) + Adjustments for Finance Costs (€1,842M) + Adjusted Taxes (€1,055M) ≈ €13,340M.
   - FFO/Debt ≈ 22.3%. For a regulated utility under S&P methodology, an FFO/Debt of 22%-30% typically corresponds to an "A" category rating (e.g., 'A-' to 'A+'), indicating a strong rating profile.

2. **Existing Hybrids**: 
   - Iberdrola already has hybrid bonds in its capital structure, classified as "Instrumentos De Capital Con Caracteristicas De Pasivo Financiero" (€576M noncurrent + €87M current = €663M).
   - If we look at the cash flow statement, the "Emision De Obligaciones Perpetuas Subordinadas" in 2021 was €2.74B, with interest payments of €169M in 2022 and €94M in 2021. The existing hybrids represent roughly 0.56% of total adjusted capital, which is well below the S&P cap of 15%. Thus, Iberdrola is accustomed to hybrids in its structure and has ample room under the cap.

3. **Capex and Growth Needs**:
   - Iberdrola has a massive capex program, typical of transitioning utilities. Construction in Progress grew from €9.06B to €11.51B, and Property, Plant & Equipment increased by €6.3B. Cash flow from investing activities was -€10.15B. This indicates a high capex intensity (primarily for renewables and networks), which requires funding.

4. **Rating Headroom & Rationale**:
   - While Iberdrola has a strong "A" range profile, its FFO/Debt is in the middle-to-lower end of the range that S&P considers strong for an 'A' rated utility (typically >23% for 'A', though medial volatility helps). The heavy capex program and rising interest rates (finance costs jumped from €2.26B to €3.04B) create moderate leverage pressure.
   - Issuing hybrids up to 7.5% of total adjusted capital (approx. €8.8B) would allow Iberdrola to optimize its capital structure, fund its significant capex pipeline, and maintain solid investment-grade headroom. The cost of hybrid debt will slightly increase the current cost of debt due to the subordination premium, but it avoids the higher cost of equity dilution and meaningfully improves adjusted leverage metrics.

Given the large capex needs (high capex intensity), the moderate leverage pressure from increasing debt and interest rates, and the existing low base of hybrids, targeting a 7.5% allocation provides a meaningful cushion to preserve the "A" rating through the investment cycle without overshooting to the 15% maximum, which is typically reserved for transformational M&A or severe downgrade risks.

<answer>7.5%</answer>