EDF’s 2022 financial profile argues for only a limited reliance on hybrid bonds.

Key points:

- Profitability deteriorated sharply: net loss was €18.2bn in 2022 versus profit of €4.8bn in 2021, and operating profit fell to a €19.4bn loss.
- Operating cash flow turned negative: cash flow from operating activities was -€7.4bn, compared with +€12.6bn in 2021.
- Leverage pressure increased: equity declined from €62.0bn to €46.6bn, while financial liabilities increased materially, especially current financial liabilities.
- EDF still has very large long-term infrastructure assets and regulated/concession-based operations, which can support long-duration financing.
- Hybrid bonds can help protect reported credit metrics because they often receive partial equity credit from rating agencies.
- However, market rates and credit spreads rose materially in 2022, making hybrid issuance more expensive.
- EDF already uses perpetual subordinated instruments, but heavy reliance would be risky given losses, negative free cash flow, and rising funding costs.

Therefore, hybrids are useful as a supplementary capital tool, but should not dominate the capital structure. A moderate-low allocation is most appropriate.

<answer>25%</answer>