EDP is a large regulated/utility group with substantial asset backing and stable operating cash flow, which can make hybrid capital useful because rating agencies often give partial equity credit while coupons may still be cheaper than common equity.

Key considerations:

- Leverage is already high. Total liabilities were about €45.0bn versus equity of €13.8bn at 2022 year-end, so debt-like financing is a major part of the structure.
- Cash generation improved materially: operating cash flow rose to about €3.78bn in 2022 from €2.02bn in 2021. This supports some use of hybrid bonds.
- However, interest-rate conditions deteriorated sharply in 2022. Euro swap rates moved from near zero/negative in 2021 to around 1.7%–1.9% in 2022, and investment-grade corporate yields/spreads also increased. This makes new hybrid issuance more expensive.
- Finance costs doubled from about €876m in 2021 to €1.75bn in 2022, showing sensitivity to financing costs.
- EDP also maintains meaningful dividend distributions, which reduces internally retained capital flexibility.
- Because hybrids are subordinated and more expensive than senior debt, relying too heavily on them would raise fixed financing burden and refinancing/call risk.
- But using none would ignore their value for a capital-intensive utility seeking balance-sheet support without issuing common equity.

Overall, EDP should use hybrid bonds as a meaningful but not dominant layer of capital: enough to strengthen credit metrics and preserve equity, but not so much that subordinated coupon costs become excessive in a rising-rate environment.

<answer>25%</answer>