###MNI's Silvia Marchetti addresses the.......>

ITALY: ###MNI's Silvia Marchetti addresses the upcoming regional votes for

greater autonomy in Lombardy and Veneto taking place on Oct 22.

- These votes are very likely to pass with polls suggesting that up to 80% will

come out in favour of greater regional power. Both regions demand that 90% of

taxation stays within their territory. This is not a vote about independence.

- POV. These are two rich regions and restricting the effective tax base for

Rome would naturally weaken Italian State finances and so be BTP-negative.

- The market is also sensitive about the general push toward regionalism in

Europe and, as the referenda results create headlines, there is a threat of

additional indigestion for Italian bonds. 

- The additional threat from the vote is the added complication to Italian

politics ahead of next year's election. The Northern League somewhat loses its

raison d'etre and will struggle to attract a southern vote.

- Spanish Bonos hardly suffered from the Catalonian vote and while the Italian

votes are BTP negative, the question is whether the news is enough to dislodge

investors. It looks unlikely.