I'll analyze Ferrovial SA's financial position and determine the appropriate hybrid bond issuance level based on the provided data and S&P methodology.

## Key Analysis

### 1. Current Hybrid Bond Position
- **Issued hybrid bonds in 2021 or 2022: NO**
- **First year of hybrid bond issuance: STOPPED**

This is a critical signal. Ferrovial has **no current hybrid bonds** in its capital structure and has **stopped issuing them**. Per the guidance: "if the entity has not issued hybrid bonds recently, it is a reliable signal that it has reasons not to do so either in the future."

### 2. Business Profile - Transportation Infrastructure
Ferrovial is primarily a **transportation infrastructure company** (airports, roads, tolls). From the S&P methodology:
- Infrastructure projects dominate: €13.67B in infrastructure investments (2023) vs €11.19B (2022)
- Significant intangible asset model investments: €13.5B (2023)
- Strong concession-based business model with long-term assets

### 3. Financial Position Analysis

**Balance Sheet Strength:**
- Total Assets: €26.28B (2023) vs €24.88B (2022) — growing
- Equity: €6.35B (2023) vs €5.83B (2022) — equity increasing
- Equity attributable to owners: €4.11B (2023) vs €4.04B (2022)
- Noncontrolling interests: €2.24B (2023) vs €1.79B (2022) — growing NCI suggests project-level equity partnerships

**Debt Structure:**
- Noncurrent debt securities and bank borrowings of infrastructure projects: €7.89B (2023) vs €7.36B (2022)
- Noncurrent debt excluding infrastructure projects: €2.88B (2023) vs €2.15B (2022)
- Current borrowings: €877M (2023) vs €1.10B (2022) — **decreasing short-term debt**

**Leverage Trends:**
- Total noncurrent liabilities: €13.14B (2023) vs €11.07B (2022)
- Current liabilities: €5.38B (2023) vs €6.54B (2022) — **significant reduction**

### 4. Profitability and Cash Flow

**Earnings Performance:**
- Revenue: €7.55B (2022) vs €6.91B (2021) — growing
- Operating profit: €423M (2022) vs €1.48B (2021) — **significant decline** (note 2021 had €1.1B impairment/gain distortions)
- Profit attributable to owners: €186M (2022) vs €1.20B (2021)
- Basic EPS dropped from €1.63 to €0.25

**Cash Flow:**
- Operating cash flow: €1.00B (2022) vs €810M (2021) — **strong and improving**
- Cash flows before financing: €270M (2022) vs €1.27B (2021) — declining but positive
- Free cash flow generation exists

### 5. Credit Metric Assessment

**Positive Factors:**
- Strong operating cash flow: €1.0B
- Significant cash position: €5.13B total cash (€4.96B excluding infrastructure projects)
- Current ratio improvement: current assets €7.42B vs current liabilities €5.38B
- Debt maturity profile: mostly noncurrent (€10.8B noncurrent vs €877M current)

**Concerns:**
- Profitability decline in 2022 (though 2021 was distorted by disposals)
- Interest rate environment: swap curves turned sharply positive in 2022 (5Y: 1.726%, 10Y: 1.927%)
- Corporate bond spreads widened: iShares Core Euro Corp Bond at 1.085% (2022) vs 0.733% (2021)

### 6. Cost of Hybrid vs. Current Debt

The **cost of hybrid bonds would materially increase** Ferrovial's cost of debt:
- Rising rate environment in 2022 (swap curves from negative to ~2%)
- Subordinated debt would require significant spread over senior debt
- Current debt largely at infrastructure project level with likely favorable terms
- No existing hybrid to benchmark from

### 7. Refinancing Needs Assessment

**Low refinancing pressure:**
- Current borrowings decreased from €1.10B to €877M
- Strong cash position (€5.1B) vs. current debt needs
- Infrastructure project debt is long-term and matched to concession lives
- No "transformational capex" or large acquisition pipeline evident

### 8. Rating Considerations

Ferrovial's profile suggests:
- **Strong "investment grade" characteristics** — infrastructure concessions, predictable cash flows
- **No material downgrade risk** requiring hybrid support
- **No leverage pressure** that would necessitate equity credit optimization
- The company has managed without hybrids and maintains access to capital markets

## Conclusion

Ferrovial exhibits characteristics strongly aligned with **0% hybrid issuance**:

| Criterion | Assessment |
|-----------|------------|
| Refinancing needs | LOW — decreasing current debt, strong cash position |
| Credit metrics | STABLE/IMPROVING — strong OCF, reduced current liabilities |
| Hybrid rating improvement | NOT NEEDED — no leverage pressure, no downgrade risk |
| Rating profile | STRONG — infrastructure assets, predictable cash flows |
| Cost of hybrid | WOULD MATERIAL INCREASE cost of debt — rising rate environment, no existing hybrid benchmark |
| Current hybrid in structure | NONE — and issuance has STOPPED |

The fact that Ferrovial **stopped hybrid issuance** and has **no current hybrids** is a strong negative indicator for future issuance. The company has:
- Strong liquidity (€5.1B cash)
- Manageable debt maturity profile
- No pressing acquisition or capex needs requiring hybrid financing
- Rising interest rate environment making hybrid costs unattractive

There is no compelling rationale for hybrid issuance. The company can maintain its credit profile through organic cash flow generation and normal debt financing at the project level.

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