REN is a regulated energy networks utility with relatively stable cash flow characteristics, but its need for hybrid capital over the next 18 months appears limited.

Key considerations:

- **No hybrid bond track record:** REN did not issue hybrid bonds in 2021 or 2022 and has never issued hybrids. This is a strong negative signal for recommending material hybrid use, especially given the instruction that prior hybrid issuance is a strong indicator of advisable future use.

- **Credit metrics are not under severe pressure:**  
  - S&P Net Debt / EBITDA for 2022 was **4.37x**, which is elevated but not extreme for a regulated utility.
  - S&P FFO / Net Debt was **16.86%**, suggesting reasonable cash-flow coverage for a regulated infrastructure business.
  - Moody’s adjusted leverage trend was **improving**, reducing the urgency for equity-credit instruments.

- **Funding and refinancing profile:** REN had meaningful gross debt activity in 2022, with **€1.165bn proceeds from borrowings** and **€1.523bn repayments**, but this looks like ordinary refinancing management rather than distress or transformational funding need. Cash remained substantial at **€365m** at year-end 2022.

- **Business risk profile supports debt capacity:** As a national electricity and gas network operator, REN benefits from regulated utility characteristics: essential infrastructure, predictable regulated earnings, and relatively stable operating cash flows. This lowers the need for hybrid bonds compared with a more volatile or unregulated issuer.

- **Leverage optimization benefit exists but is not compelling:** A hybrid could improve S&P-adjusted credit metrics through partial equity credit, but there is no indication that REN’s investment-grade profile depends on this. The company’s leverage trend is improving, and there is no evidence of a large acquisition or transformational capex program requiring aggressive balance-sheet support.

- **Market cost environment worsened materially in 2022:** Euro swap rates rose sharply in 2022, and subordinated/hybrid spreads also increased. A new hybrid would likely be more expensive than REN’s existing senior debt funding, making it unattractive unless rating preservation required it.

Overall, the case for hybrid issuance is weak. REN has moderate leverage and ongoing infrastructure investment needs, but its improving leverage trend, regulated business model, absence of prior hybrid issuance, and higher hybrid funding cost argue against using hybrids in the next 18 months. If any issuance were considered, it would likely be very limited, but the strongest recommendation is **no hybrid issuance**.

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