Ørsted should use hybrid bonds to a **moderate-to-high, but not maximum, extent** over the next 18 months.

Key considerations:

- **Starting point already includes substantial hybrids.** Hybrid capital was **DKK 19.8bn** at year-end 2022, up from **DKK 18.0bn** a year earlier. The company also issued **DKK 3.7bn** of hybrid capital in 2022 while repurchasing **DKK 1.9bn**, indicating hybrids are already an established capital-management tool. This argues against a 0% or very low recommendation, but also means the company may already be using part of S&P’s 15% equity-credit capacity.

- **Large capital intensity and growth funding needs.** Ørsted is highly capital intensive: PPE and intangible assets increased materially, production assets rose from **DKK 95.6bn to DKK 119.2bn**, and annual purchases of PPE/intangibles were **DKK 33.0bn**. Operating cash flow of **DKK 11.9bn** did not cover investment cash outflows of **DKK 17.9bn**, implying continued external funding needs.

- **Leverage pressure increased.** Long-term borrowings almost doubled from **DKK 31.5bn to DKK 60.5bn**, while total liabilities rose from **DKK 184.8bn to DKK 218.6bn**. Total assets also expanded strongly, but the balance sheet is clearly moving into a heavier funding phase. Hybrid issuance would help preserve adjusted credit metrics because S&P typically gives partial equity credit to qualifying hybrids, subject to the 15% adjusted-capital cap.

- **Business profile is strong but exposed to unregulated power risks.** Ørsted has a strong renewable generation platform, large scale, geographic diversity across Europe, the U.S., and Taiwan, and state ownership by Denmark. However, it is not a pure low-risk regulated utility; it has meaningful unregulated power exposure, project execution risk, offshore wind construction risk, and market/hedging volatility. This supports the use of hybrids for rating headroom.

- **Earnings are robust, but cash flow coverage is weaker than accounting profits.** EBITDA was strong at **DKK 32.1bn**, and net profit increased to **DKK 15.0bn**. However, free cash flow after capex was negative before financing, and the company relied on borrowings and hybrid issuance. This supports a meaningful hybrid allocation.

- **Cost environment has worsened.** Interest-rate benchmarks rose sharply in 2022: 5Y swaps increased to about **1.7%**, 10Y swaps to about **1.9%**, and subordinated/non-financial IG spreads also widened. Hybrid coupons will likely be materially more expensive than senior debt issued in the low-rate period. This argues against maximizing hybrid use at 15%, unless urgently needed to prevent a downgrade.

- **Not enough evidence for maximum 15%.** The company has high capex and leverage pressure, but it remains profitable, has strong liquidity including **DKK 16.2bn cash**, has access to debt markets, and benefits from scale, strategic importance, and Danish state ownership. Hybrid support is useful, but not “substantially required” to stabilize the credit profile in the way implied by the 15% case.

Overall, Ørsted should continue using hybrids as an important part of its capital structure, especially to support growth capex and protect credit metrics, but the higher interest-rate environment and already meaningful outstanding hybrid balance make a full 15% recommendation too aggressive. The best fit is **11.25% of total adjusted capital**: high enough to reflect capex intensity and leverage pressure, but below the S&P maximum.

<answer>11.25%</answer>