Non-conforming issuers in the securitisation market are enjoying the same reduction in margins that prime issuers have reported this year. Pepper Australia completed a A$500 million issue of non-conforming residential mortgage-backed securities last week, with pricing 10 to 15 basis points lower than the margins it paid on equivalent tranches with its previous issue, last October.The latest transaction, Pepper Residential Securities Trust No.12, included a US dollar tranche. The US$200 million A1-u1 tranche, which has a weighted average life of one year, was priced 35 bps over one-month Libor.Pricing on the A$136 million A1-a tranche, which has a weighted average life of 2.5 years, was 110 bps over the one-month bank bill swap rate.Last October, Pepper paid 120 bps over the swap rate on the A1 tranche, which had a weighted average life of 2.4 years.In the latest deal, pricing on the A$52.5 million A2 tranche, which has a weighted average life of 2.5 years, was 150 bps over the swap rate.Last October, Pepper paid 165 bps over the swap rate on the A2 tranche, which had a weighted average life of 2.4 years.In the latest deal, pricing on the A$26.5 million B tranche, which has a weighted average life of 4.4 years, was 200 bps over the swap rate.Pepper did not disclose the pricing on the C, D, E, F or G tranches.Pepper said in a statement that, apart from the improved pricing, the deal was notable for two reasons: it was the first time Pepper has sold non-conforming securities in the US; and it was the largest pure non-conforming RMBS transaction since the financial crisis.