Pepper Australia has completed its second issue of non-conforming residential mortgage-backed securities for the year, raising A$400 million of funding to add to the $500 million it raised in April.Pepper said local and overseas investors participated in the issue, Pepper Residential Securities Trust No. 13.Pepper will pay 95 basis points over the one-month bank bill swap rate on the $280 million of A1 notes, which have a weighted average life of 2.2 years.In April, Pepper priced the top Australian dollar tranche of a dual currency issue at 110 bps over the bank bill swap rate.Pepper Australia group treasurer Todd Lawler said the tightening of margins on non-conforming issues was tracking the tightening of spreads on prime issues.Pricing on the $47.6 million of A2 notes in the latest deal, which have a weighted life of 2.2 years, was 130 bps over the swap rate.Pricing on the $19.6 million of B notes, which have a weighted average life of 4.2 years, was 175 bps over swap.Pepper did not disclose pricing on the C, D, E, F or G notes.National Australia Bank debt markets director, Sarah Samson, said in a media release that arrears and losses in Australian non-conforming mortgage securities were lower than in any other market. NAB was joint lead manager on the deal with Commonwealth Bank.