I'll analyze Terna's situation to determine the appropriate hybrid bond issuance level, considering the guidelines and the company's specific circumstances.

## Key Facts Analysis

### Current Hybrid Position
- **Already issued hybrid bonds**: Yes, first issuance in 2022
- **Current hybrid bonds outstanding**: €989 million (from equity section: "Equity Instruments Perpetual Hybrid Bonds" = €989,000,000)
- **Total Equity 2022**: €6,169,100,000
- **Total Adjusted Capital**: Need to estimate based on debt structure

### Capital Structure (2022)
- **Equity**: €6,169,100,000
- **Long-term borrowings**: €8,416,700,000
- **Short-term borrowings**: €444,100,000
- **Current portion of long-term borrowings**: €1,909,300,000
- **Total debt**: ~€10,770,100,000

### Credit Metrics
- **S&P Net Debt / EBITDA**: 4.35 (moderately high for regulated utility)
- **S&P FFO / Net Debt**: 0.1724 (relatively low, indicating leverage pressure)
- **Moody's adjusted leverage trend**: Improving

### Business Profile Assessment
Terna is Italy's national electricity transmission system operator - a **regulated utility** with:
- Natural monopoly characteristics
- Essential infrastructure service
- Revenue largely from regulated tariffs
- Strong regulatory framework (Italian/EU)

### Financial Performance (2022)
- Revenue: €2,898 million (growth from €2,535 million)
- Operating profit: €1,333 million
- Net profit: €858 million
- Strong operating cash flows: €2,324 million
- Heavy capex: €1,492 million in PP&E + €212 million intangibles = ~€1.7 billion
- Dividend payments: ~€596 million

### Key Considerations

**Factors supporting hybrid issuance:**
1. **Already issued hybrids in 2022** (€989 million) - precedent established
2. **High capex intensity**: ~€1.7 billion annual capex vs €2.9 billion revenue (capex/revenue ~59%)
3. **Moderate leverage pressure**: Net Debt/EBITDA of 4.35 is elevated for a regulated utility
4. **FFO/Net Debt of 0.1724** indicates some financial flexibility constraints
5. **Improving leverage trend** suggests management is actively managing capital structure
6. **Regulated utility with stable cash flows** - suitable for hybrid instruments

**Factors limiting hybrid issuance:**
1. **Already has €989 million outstanding** - about 9.2% of equity (€989M/€6,169M)
2. **Improving leverage trend** - may not need aggressive deleveraging
3. **Strong operating cash flow** (€2.3 billion) relative to capex needs
4. **Investment grade credit quality** likely preserved without maximum hybrid usage

### Assessment Against Guidelines

| Criterion | Terna Situation | Guideline Match |
|-----------|---------------|---------------|
| Refinancing needs | Moderate (debt maturities, ongoing capex) | Not "low" |
| Capex intensity | High (~€1.7B/year, 59% of revenue) | High |
| Rating pressure | Moderate (ND/EBITDA 4.35, FFO/ND 0.17) | Moderate constraint |
| Hybrid improves metrics | Yes, meaningful improvement to leverage | Yes |
| Cost impact | Rising rate environment (swap curves up in 2022) | Marginal to slight increase |
| Current hybrids | Already €989M issued in 2022 | Established precedent |

The 2022 issuance of €989 million represents approximately:
- 9.2% of equity (€989M/€6,169M)
- If we consider total adjusted capital (equity + debt), this is roughly 5.3% of total adjusted capital

However, the question asks about **additional** hybrid issuance in the next 18 months, with a maximum of €3 billion per year.

Given:
- Already at ~9.2% of equity with existing hybrid
- High capex intensity continuing
- Moderate leverage pressure (ND/EBITDA 4.35)
- Improving but still constrained metrics
- Regulated utility with stable cash flows suitable for hybrids
- Rising interest rate environment (2022 swap curves up significantly) making new issuance more expensive

The most appropriate level would be **7.5%** because:
- The company has already established hybrid issuance in 2022, showing appetite and utility for these instruments
- High capex intensity warrants continued capital structure optimization
- Moderate leverage pressure exists (ND/EBITDA 4.35 is at higher end for regulated utilities)
- The "improving" leverage trend suggests management is optimizing, not in distress
- Additional hybrids would meaningfully improve adjusted leverage metrics
- Cost of hybrids will slightly increase current cost of debt (rising rate environment in 2022)

However, considering they already have €989M outstanding (roughly equivalent to ~5-6% of total adjusted capital depending on calculation), adding another 7.5% would bring them close to or at the 15% cap.

Actually, re-reading: the question asks what extent they should utilize, with 0%, 3.75%, 7.5%, 11.25%, 15% as options. The existing hybrid should be considered as part of the starting point.

Given they ALREADY issued in 2022 (€989M), and the guideline states "previous levels of hybrid bond issuance is a strong indicator," the fact they issued ~€1B suggests moderate appetite. The improving trend suggests they don't need maximum deleveraging. The high capex suggests ongoing need.

7.5% seems most appropriate: meaningful but not maximum, reflecting moderate needs and established but not aggressive precedent.

<answer>7.5%</answer>