To assess the appropriate level of hybrid bond issuance for HERA S.P.A., we analyze its financial position as of December 31, 2022.

**1. Financial Performance and Leverage:**
- **Revenue Growth:** Revenue surged significantly from 10.56 billion EUR in 2021 to 20.08 billion EUR in 2022.
- **Operating Profitability:** Profit from operating activities decreased from 611.7 million EUR in 2021 to 533.8 million EUR in 2022, despite the revenue spike, indicating pressure on margins (likely due to the rise in raw materials costs from 6.67 billion EUR to 16.73 billion EUR).
- **Leverage:** Non-current financial liabilities increased from 3.72 billion EUR to 5.69 billion EUR. Total liabilities increased from 10.61 billion EUR to 13.47 billion EUR.
- **Cash Flow:** Cash flow from operating activities dropped dramatically from 1.05 billion EUR in 2021 to 35.7 million EUR in 2022. This was largely driven by a substantial increase in working capital requirements (inventories and trade receivables).

**2. Capex and Capital Intensity:**
- Hera is a multi-utility company operating in gas, electricity, and water, sectors inherently requiring consistent, high levels of capital expenditure to maintain infrastructure and comply with regulatory standards.
- Investing activities show continued high spending: Purchase of PP&E (225.6 million EUR) and Intangible Assets (483.9 million EUR).

**3. Rationale for Hybrid Bonds:**
- The company faces a challenging environment characterized by a significant increase in net debt and a sharp contraction in operating cash flow.
- While the company has a solid equity base (3.64 billion EUR), the rapid accumulation of debt (proceeds from non-current borrowings were 2.13 billion EUR) suggests a need for capital structure optimization to preserve its credit metrics and rating.
- A hybrid issuance of 7.5% would provide meaningful rating headroom and improve adjusted leverage metrics without overly burdening the company with the higher coupon costs associated with hybrids, given that its cost of debt is currently rising (as seen in market swap data). 7.5% represents a balanced approach to the "moderate" but rising leverage pressure and the need to fund ongoing capital-intensive utility operations.

Given the significant increase in debt and working capital pressure, coupled with the need for ongoing infrastructure investment, a 7.5% allocation to hybrid bonds is appropriate to provide financial flexibility and support credit stability.

<answer>7.5%</answer>