To assess whether ENGIE is suitable to issue hybrid bonds, we need to evaluate its capital structure, profitability, and existing use of hybrid instruments. 1. **Existing Hybrid Instruments and Market Familiarity**: The balance sheet and statement of changes in equity explicitly show "Deeply Subordinated Perpetual Notes" amounting to €3.767 billion at the beginning of 2022 and €3.393 billion at the end of 2022. This proves the company already has hybrid capital in its structure and is familiar with the perpetual hybrid bond market, making it highly suitable for further issuance. 2. **Capital Structure and Leverage**: As of the end of 2022, Total Equity stands at €39.285 billion, and Noncurrent Liabilities (primarily long-term borrowings and derivatives) stand at €102.427 billion. The firm has significant debt obligations but maintains a solid equity base. Issuing hybrid bonds (which are typically treated as 50% equity by rating agencies) would help optimize the company's weighted average cost of capital and improve its credit metrics without diluting existing shareholders. 3. **Profitability and Coverage**: Although 2022 saw a loss from continuing operations (-€1.793 billion) due to massive impairments (€2.774 billion) and high finance costs (€3.7 billion), the company generated robust operating cash flows of €8.586 billion and cash flows from operations before working capital changes of €12.415 billion. This strong cash generation capacity provides adequate coverage for the discretionary coupon payments associated with hybrid bonds. 4. **Dividend Policy**: The company maintained dividend payments (€2.082 billion paid to owners of the parent in 2022) and proposed further dividends, showing a commitment to returns, which aligns well with the investor base for hybrid securities. Given the existing deep subordinated perpetual notes, the strong operating cash flow, and the strategic need to balance a highly leveraged capital structure, ENGIE is strongly suitable to issue hybrid bonds. Strongly Suitable