ENI is a large, profitable investment-grade-style issuer with substantial scale and access to debt markets. In 2022 it generated very strong earnings and cash flow: profit attributable to owners rose to €13.9bn, operating cash flow was €17.5bn, and equity increased to €55.2bn. Leverage also appears manageable: total borrowings and lease liabilities were significant, but equity was large and the company held over €10bn in cash plus sizable current financial assets.

Hybrid bonds can be useful for ENI because they receive partial equity treatment from rating agencies while still being cheaper than common equity. This is especially relevant for a capital-intensive energy company with large investment needs, volatile commodity exposure, and a desire to preserve credit metrics. ENI already had perpetual subordinated bond activity in prior years, indicating hybrids are an accepted part of its funding toolkit.

However, the market backdrop in 2022 became much less favorable for hybrid issuance. EUR swap rates rose sharply across the curve, with 5Y average swaps moving from negative levels in 2020–2021 to 1.726% in 2022, and 10Y swaps to 1.927%. Corporate bond spreads also widened, and subordinated/hybrid spreads were meaningfully higher than senior investment-grade spreads. The iBoxx non-financial IG subordinated/senior proxy shows 2022 average around 2.295%, versus 1.085% for core euro corporate bonds. This means hybrids carried a material cost premium at a time when ENI’s balance sheet and cash generation did not require aggressive equity-credit optimization.

Therefore, ENI should use hybrid bonds as a moderate supplement rather than a dominant funding source. A 0% allocation would ignore the strategic benefits of equity credit and long-dated flexibility, but 50% or more would be excessive given high hybrid costs, strong internal cash generation, and a solid equity base. The most appropriate reliance is limited but meaningful.

<answer>25%</answer>