Fortum’s 2022 position suggests hybrid bonds could be useful, but only to a limited extent.

Key points:

- **Balance sheet leverage is moderate after the Uniper deconsolidation:** liabilities were EUR 15.9bn versus equity of EUR 7.7bn at year-end 2022. This is not a situation where the firm should rely primarily on equity-like hybrid instruments.
- **Equity weakened materially:** total equity fell from EUR 13.7bn to EUR 7.7bn, and profit for the year was a large loss of EUR 10.3bn, mainly from discontinued operations. Hybrids could help support credit metrics without immediate shareholder dilution.
- **Continuing operations remained profitable and cash-generative:** comparable operating profit rose to EUR 1.9bn, comparable EBITDA to EUR 2.4bn, and continuing operating cash flow was EUR 2.1bn. This supports capacity for fixed financing costs.
- **But market rates rose sharply in 2022:** 5–10Y swap rates moved from near zero/negative to around 1.7%–1.9%, and corporate credit spreads also widened. Hybrid bonds would therefore be relatively expensive compared with prior years.
- **Business risk and recent volatility argue against heavy hybrid dependence:** Fortum experienced very large discontinued-operation losses and major balance sheet contraction. A high hybrid share could increase refinancing and coupon-deferral concerns.
- **Utility profile supports some use:** as a capital-intensive energy company with regulated/contracted elements and long-lived assets, Fortum can reasonably include hybrids as part of a diversified capital structure.

Overall, hybrids are appropriate as a supplementary layer to reinforce equity credit and financial flexibility, but not as a dominant funding source given higher market costs and recent earnings volatility. Among the choices, **25%** is the most balanced reliance level.

<answer>25%</answer>