A senior UK regulator has batted off concerns over the lack of a credit component in risk-free Libor replacement rates, saying there is no support for a funding spread to be layered on top of Libor’s replacement for UK markets, the sterling overnight index average, or Sonia.

Edwin Schooling Latter, director of markets and wholesale policy at the Financial Conduct Authority, which oversees Libor, said the Bank of England’s working group on sterling risk-free reference rates has seen no demand