Moody's Investor Services has assigned provisional ratings to Pepper's first non-conforming and prime RMBS transaction for 2018, the Pepper Residential Securities Trust No. 20. A pre-sale media release from Moody's described the transaction as a securitisation of non-conforming and prime residential mortgage loans originated and serviced by Pepper Group Limited (a firm that is not rated by Moody's). The equivalent of A$581 million of debt securities have been collectively rated (P) Aaa (sf), with a further six subordinated classes of notes, totalling A$108 million, unrated by Moody's.The group of top-rated classes of notes includes three tranches of Class A notes and features a single series of hard bullet US$113 million Class A1-u1 Notes with a legal final maturity of one year.  The portfolio of securitised mortgages includes loans extended to borrowers with prior credit impairment (comprising 35 per cent of the total number of loans), and loans underwritten on an alternative documentation basis (34 per cent), Moody's said.Interest-only loans account for just under 25 per cent of the pool, below the Australian mortgage market average of 35 per cent.A clear majority (78 per cent) of the mortgages in the pool were originated in the last six months, and almost 40 per cent of the loans have a loan-to-value above 80 per cent.As with Pepper's other RMBS deals, NAB is the arranger, and has undertaken to subscribe for any of the USD denominated notes that are not re-sold on the legal final maturity date.Last year Pepper issued three RMBS series, with the most recent - the A$600m Pepper Residential Securities Trust No 19 - having a similar structure to PRS20. In that deal, which was three times oversubscribed, the senior US$250 million AAA-rated one-year bullet note was priced at 35 basis points over 1-month US Libor; and the top-rated senior A$100 million notes priced at 68 bps over 1-month BBSW.