Let’s break this down step-by-step. --- **1. Understanding the question** We’re asked to determine how much of S&P’s 15% hybrid cap ENI should utilize, based on: - S&P’s "total adjusted capital" = total debt + equity - The cap means only 15% of that total can be hybrids for equity credit purposes. The choices are 0%, 25%, 50%, 75%, or 100% of that 15% cap. --- **2. ENI’s capital structure at end of 2022** From the data: - **Total liabilities** (2023-01-01): €96,900M - **Total equity** (2023-01-01): €55,230M - **Total adjusted capital** = €96,900M + €55,230M = €152,130M --- **3. S&P’s 15% hybrid cap in euros** 15% of €152,130M = **€22,819.5M** --- **4. Has ENI issued hybrids currently?** Looking at the equity movement statements, there are lines for: - "Increase Decrease Through Net Issue Reimbursement Of Perpetual Subordinated Bonds Equity" - "Decrease Through Coupon Payment On Perpetual Subordinated Bonds Equity" In 2022, there was no new issuance, only a coupon payment of €138M on existing perpetual sub bonds. The outstanding hybrids are part of "Other Reserves," but the exact amount isn’t directly stated in the facts. However, in prior periods (2021 and 2020), there were large issuances of €2,000M–€3,000M. These likely remain outstanding. --- **5. Market conditions in 2022** The data shows rates rising sharply in 2022 compared to 2020–2021: - 5Y swap: -0.346% (2020) → 1.726% (2022) - 10Y swap: -0.143% (2020) → 1.927% (2022) - Corporate bond yields also rising Higher rates make hybrid issuance more expensive for companies, reducing the incentive to issue up to the full cap. --- **6. Key financials** ENI had strong profitability in 2022 (Net income ~€13.9B), positive operating cash flow (€17.5B), and dividends of €3.0B. This suggests limited capital need and a cautious approach toward expensive financing. --- **7. Conclusion** Given: - Already has some hybrids outstanding but not near the 15% cap - Rising rate environment discourages new issuance - Strong cash flow reduces need for hybrid capital They’d likely utilize only a moderate portion of the allowed cap—not zero, but not full. --- 50%