How Corporate Hybrid Bonds Support Strategic Financing Objectives: A Case Study of Enel S.p.A.’s January 2026 Perpetual Hybrid Bonds Issuance

The existing literature on hybrid financial instruments remains mainly concentrated on their pricing, their tax and accounting classification, and the motivations behind their issuance, with comparatively little attention paid to the actual magnitude of the financial consequences a hybrid issuance produces for a specific firm relative to the conventional use of debt or equity. This thesis addresses that gap through an in-depth case study of Enel S.p.A.'s €2bn dual tranche perpetual hybrid bond issuance of January 2026, comparing the firm's actual financing outcome against a counterfactual scenario in which the same capital had been raised through senior unsecured debt. Enel is selected as a typical and most likely case given its long and repeated hybrid issuance history, its ownership structure, and the scale of its capital expenditure program. The comparison is developed across four dimensions. The first examines debt capacity and credit metrics, contrasting the instrument's treatment under IFRS, under the rating agencies' partial equity credit, and under a fully debt counterfactual. The second concerns earnings and the cost of capital, showing that because interest is tax deductible in Italy regardless of the instrument's IFRS classification, the true after tax cost of the hybrid is considerably closer to that of senior debt than the headline coupon premium suggests, and situating this within a broader cost of capital analysis showing that the case for hybrid issuance rests on preserved flexibility rather than cost minimisation. The third investment capacity, showing that the actual capital structure preserves greater headroom for further debt financed investment, relative to the rating threshold publicly stated by S&P, than the counterfactual structure would. The fourth addresses risk distribution among capital providers, using the pricing differential between the two tranches and a liquidation waterfall analysis to quantify how subordination and coupon deferral reallocate downside risk. This analysis is complemented by a forward-looking Monte Carlo simulation of the coupons to which the two tranches reset once their initial fixed rate periods end, characterising the distribution of future outcomes and the probability that they exceed the currently fixed rate. These findings have to be considered within Enel's own stated strategic priorities, linking improved leverage metrics explicitly to the flexibility required to pursue its investment plans. The thesis argues that the hybrid programme functions not as a cost minimising financing choice but as a structural precondition for sustaining that investment programme while preserving the credit profile needed for continued capital market access. Its contribution is to move the literature from establishing financial flexibility as a plausible motive for hybrid issuance to demonstrating, at the level of a specific firm and transaction, how much flexibility is actually obtained and at what cost, within the acknowledged limits that a single case design places on the generalisability of its conclusions.