I’ll reason through the capital structure question step by step. --- **1. Business profile** VINCI is a large infrastructure and construction group with a significant concession business (airports, highways) that generates stable, long-term cash flows. This means it has relatively predictable revenue and can support some leverage. **2. Current capital structure** From the 2022 data: - Equity attributable to owners of parent: €25.9bn - Non-current bonds: €20.4bn - Other non-current borrowings: €3.2bn - Short-term borrowings: €6.4bn - Cash and equivalents: €12.6bn The group already has significant debt, but also large cash balances and strong cash flow from operations (€9.4bn in 2022). **3. Interest rate environment** Swap rates rose sharply in 2022 (e.g., 10Y average 1.927% vs 0.053% in 2021) and credit spreads widened (sub-sen delta for IG Non-Financials averaged 2.295% in 2022 vs 1.298% in 2021). This means the cost of hybrid issuance would be significantly higher than in prior years. **4. Hybrid bond characteristics** Hybrids are subordinated, with equity-like features for rating agencies, but more expensive than senior debt. They are most attractive when: - Rates are low - Spreads are tight - A company wants to protect its credit rating while still raising capital **5. Suitability for VINCI** Given the large infrastructure investment needs (€28.2bn service concession rights), VINCI may benefit from some hybrid capital to maintain its rating while financing growth. However, in a rising rate environment, heavy reliance on hybrids is costly. Moderate use (around 25%) could provide rating support without excessive interest burden, but 0% is also plausible given the strong operating cash flow and cash position. **6. Conclusion** A small allocation to hybrids (25%) could balance the cost of capital with rating considerations, but market conditions in 2022 make a lower or zero allocation defensible. Still, given large capex needs and rating sensitivity, I lean toward a modest usage. --- 25%