I'll analyze Fortum Oyj's financial position and determine the appropriate hybrid bond issuance level based on the provided data and guidelines.

## Key Financial Analysis

### Current Financial Position (2022)

**Profitability & Earnings:**
- Revenue: €8,804M (up from €6,422M in 2021)
- Comparable Operating Profit: €1,871M (up from €1,429M)
- However, significant losses from discontinued operations: -€11,302M
- Total Profit/Loss: -€10,290M (massive loss due to discontinued operations)
- Basic EPS: -€2.72 (negative)

**Balance Sheet Transformation:**
- Total Assets dropped dramatically from €149,661M to €23,642M (major divestiture/discontinued operations effect)
- Equity fell from €13,665M to €7,737M
- Noncontrolling interests collapsed from €1,534M to €67M

**Cash Flow:**
- Operating cash flow from continuing operations: €2,104M (strong)
- Cash flows from operating and investing activities (continuing): €3,568M
- However, discontinued operations consumed significant cash

**Debt Metrics (provided):**
- S&P Net Debt / EBITDA: 1.84
- S&P FFO / Net Debt: 0.4556 (approximately 45.6%)
- Moody's adjusted leverage trend: Improving

### Critical Observations

1. **Major Structural Transformation**: The massive reduction in assets (from €149.7B to €23.6B) indicates Fortum underwent major divestitures, most notably the exit from Russian operations (Uniper-related). This is a transformational restructuring, not ordinary course.

2. **No Prior Hybrid Issuance**: The company has never issued hybrid bonds ("First year of hybrid bond issuance: never"). This is a strong negative indicator per the guidelines.

3. **Mixed Credit Metrics**: 
   - Net Debt/EBITDA of 1.84 is relatively moderate
   - FFO/Net Debt of 45.6% is reasonable
   - Moody's trend is "improving"

4. **Dividend Policy**: Despite massive losses, Fortum proposed dividends of €0.91/share (€817M), down from €1.14/share prior year. This signals some confidence in continuing operations but also cash outflow.

5. **Market Environment**: Rising interest rates in 2022 (swap curves turned positive after years of negative rates) make hybrid issuance more expensive.

### Assessment Against Guidelines

**Arguments for 0%:**
- No prior hybrid issuance (strong signal per guidelines)
- Never issued hybrids, suggesting structural reasons not to
- Credit metrics are improving (Moody's view)
- Net Debt/EBITDA of 1.84 is not severely distressed
- Major asset sales have likely reduced debt needs
- Rising rate environment increases hybrid cost

**Arguments against higher percentages:**
- Not "A" range rating (likely lower given massive losses)
- No extraordinary capex needs apparent (assets shrunk dramatically)
- No transformational M&A program visible (opposite: divestitures)
- No material downgrade risk requiring hybrid support
- FFO/Net Debt of 45.6% provides reasonable coverage

**Why not 3.75% or higher?**
- The company just completed major restructuring via divestitures, not acquisitions
- No refinancing needs are evident from the cash flow statement
- Strong continuing operations cash flow (€2.1B operating, €3.6B operating+investing)
- The "improving" leverage trend from Moody's suggests no need for leverage optimization
- Cost of hybrids would increase cost of debt in rising rate environment

### Conclusion

Fortum's situation is unusual due to the massive restructuring. However, the key factors point to **0%** hybrid issuance:

1. **Strong prior behavior**: Never issued hybrids - this is explicitly called out as "a reliable signal that it has reasons not to do so either in the future"

2. **No funding needs**: The company generated strong cash flow from continuing operations and completed major divestitures, reducing asset base and likely debt

3. **Improving trajectory**: Moody's says "improving" - no need for capital structure optimization

4. **No rating preservation need**: Metrics are moderate and improving, not distressed

5. **Cost disadvantage**: Rising rate environment makes hybrids more expensive than historical

The massive losses are from discontinued operations (Russian exit), not ongoing operations. The continuing business is profitable with strong cash flow. No hybrid issuance is warranted.

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