Margins continue to widen in the mortgage securitisation market, with the latest issuer Pepper describing market conditions as tough.

Pepper raised A$500 million of funding through an issue of mortgage-backed securities that was priced last week. The issue, PRS 32 is backed by a mix of prime and non-conforming mortgages.

Pricing on the A1-s notes, which have a value of $100 million and a weighted average life of 0.4 years, was 65 basis points over the one-month bank bill swap rate.

Pricing on the A1-a notes, worth $275 million and a weighted average life of 2.9 years, was 130 bps over BBSW.

The A2 notes, worth $65 million and with a weighted average life of 2.9 years, were priced at a margin of 190 bps and the B notes, worth $34 million and with a life of 4 years, were priced at a margin of 240 bps.

When Pepper issued PRS 31 last November, the margin was 60 bps on the A1-s notes, 100 bps on the A1-a notes, 120 bps on the A2 notes and 140 bps on the B notes.

Pepper Money chief executive Mario Rehayem said: “It is pleasing to see continued support from debt capital market investors for both Pepper’s prime and non-conforming issuance, despite the tougher market conditions.”