## Assessment of Terna S.p.A.'s Suitability for Hybrid Bond Issuance

### Key Observations:

**1. Already Issued Hybrid Bonds:**
The most telling fact is that Terna has already issued hybrid/perpetual bonds during 2022, with €989 million recorded as "Equity Instruments Perpetual Hybrid Bonds" in the equity section. This demonstrates the company has already accessed this market and has experience with hybrid instruments. There's also a "Coupon Payable To Holders Of Hybrid Bonds" line of -€21.1 million, confirming ongoing hybrid bond obligations.

**2. Strong and Stable Profitability:**
- Revenue grew from €2,534.5M to €2,898.1M (14.3% growth)
- EBIT (Operating Profit) increased from €1,200.4M to €1,333.5M (11.1% growth)
- Net profit attributable to owners grew from €789.4M to €857.0M (8.6% growth)
- Consistent profitability supports coupon payments on hybrid instruments

**3. Solid Cash Flow Generation:**
- Operating cash flows of €2,323.7M in 2022 (up significantly from €832.3M)
- Strong operational cash generation relative to total debt obligations

**4. Investment-Grade Profile:**
- Terna is a regulated utility (national electricity grid operator in Italy)
- Regulated revenue streams provide high visibility and stability
- Backed by CDP Reti S.p.A. (ultimately Cassa Depositi e Prestiti, Italian state-owned entity)
- Total assets of €22.8B with equity of €6.17B

**5. Leverage and Capital Structure:**
- Total debt (long-term + short-term borrowings + current portion): €8,416.7M + €444.1M + €1,909.3M = ~€10,770M
- Debt-to-equity ratio: ~1.75x (manageable for a regulated utility)
- Interest coverage: EBIT/Finance costs = €1,333.5M / €121.8M ≈ 11.0x (very strong)

**6. Regulatory Framework:**
- As Italy's transmission system operator, Terna operates under a regulated framework with predictable cash flows
- Regulated utilities are among the most frequent issuers of hybrid bonds, as rating agencies give them equity credit

**7. Dividend Policy:**
- Regular dividend payments (including interim dividends) indicate financial discipline
- Dividends of ~€596M annually are well-covered by earnings

### Conclusion:
Terna is a textbook candidate for hybrid bond issuance — a large, regulated utility with stable cash flows, strong investment-grade characteristics, state-linked ownership, and proven access to the hybrid bond market (having already issued €989M). The company has excellent interest coverage, predictable regulated revenues, and the financial scale to support hybrid instruments.

<answer>Strongly Suitable</answer>