ACEA should use hybrid bonds only modestly, if at all, over the next 18 months.

Key considerations:

- **No existing hybrid track record:** ACEA had not issued hybrids in 2021 or 2022 and has never issued hybrid bonds. Under the guidance, this is a strong signal that the company may have strategic, cost, documentation, investor-base, or rating-policy reasons not to rely on hybrids. This weighs heavily against a large recommendation.

- **Regulated utility profile supports credit quality:** ACEA is primarily a multi-utility with significant regulated water, electricity distribution, and infrastructure-type activities in Italy. This business model generally has relatively stable cash flows, tariff-based cost recovery, and lower volatility than merchant energy or commodity businesses. That reduces the urgency for aggressive capital structure optimization.

- **Leverage is meaningful but not clearly under acute stress from the provided data:** Year-end 2022 equity was about **€2.76bn**, while financial liabilities were approximately **€5.34bn** gross, or around **€4.78bn net of cash**. EBITDA-like gross profit/MOL was about **€1.31bn**, implying net debt/EBITDA in the mid-to-high 3x area on a simple basis. That is not low, but there is no explicit indication of imminent downgrade risk or that investment-grade preservation is dependent on hybrids.

- **High investment needs, but not transformational:** ACEA had substantial capex/investment outflows in 2022, with investing cash flow of about **€863m** and negative free cash flow after capex and dividends. This supports some incremental balance-sheet flexibility. However, this does not appear to be a transformational M&A or capex program that would justify using the full S&P hybrid equity-credit allowance.

- **Interest-rate environment became less favorable in 2022:** Euro swap rates increased sharply in 2022, and subordinated/non-financial IG spreads also widened. A new hybrid would likely be materially more expensive than ACEA’s embedded senior debt cost, reducing the economic attractiveness of issuance.

- **Potential benefit exists, but is limited:** A modest hybrid could provide useful rating flexibility by receiving partial equity credit from S&P and improving adjusted leverage metrics. But because ACEA starts from zero hybrids and the cost environment is unfavorable, the advisable amount should remain well below the 15% cap.

Overall, the appropriate recommendation is **3.75% of total adjusted capital**: enough to acknowledge funding pressure and some leverage optimization value, but restrained because ACEA has no hybrid issuance history and no evidence of severe rating pressure requiring a large hybrid layer.

<answer>3.75%</answer>