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Funds Held for Clients and Corporate Investments | 6 Months Ended
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Nov. 30, 2020
Funds Held for Clients and Corporate Investments [Abstract] |
Funds Held for Clients and Corporate Investments | Note E: Funds Held for Clients and Corporate Investments Funds held for clients and corporate investments are as follows:
|  | November 30, 2020
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | unrealized |  | unrealized |  | Fair
In millions |  | cost |  | gains |  | losses |  | value
Type of issue: |  |  |  |  |  |  |  |  |  |  |  |
Funds held for clients' money market securities and other ‎ cash equivalents |  | $ | 359.3 |  | $ | — |  | $ | — |  | $ | 359.3
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  |  | 75.8 |  |  | 1.9 |  |  | — |  |  | 77.7
Corporate bonds |  |  | 630.4 |  |  | 35.3 |  |  | — |  |  | 665.7
Municipal bonds |  |  | 1,701.1 |  |  | 43.4 |  |  | (0.5) |  |  | 1,744.0
U.S. government agency and treasury securities |  |  | 527.7 |  |  | 28.8 |  |  | — |  |  | 556.5
VRDNs |  |  | 142.9 |  |  | — |  |  | — |  |  | 142.9
Total AFS securities |  |  | 3,077.9 |  |  | 109.4 |  |  | (0.5) |  |  | 3,186.8
Other |  |  | 26.6 |  |  | 5.4 |  |  | — |  |  | 32.0
Total funds held for clients and corporate investments |  | $ | 3,463.8 |  | $ | 114.8 |  | $ | (0.5) |  | $ | 3,578.1
|  | May 31, 2020
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | unrealized |  | unrealized |  | Fair
In millions |  | cost |  | gains |  | losses |  | value
Type of issue: |  |  |  |  |  |  |  |  |  |  |  |
Funds held for clients' money market securities and other ‎ cash equivalents |  | $ | 683.5 |  | $ | — |  | $ | — |  | $ | 683.5
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  |  | 68.0 |  |  | 1.7 |  |  | — |  |  | 69.7
Corporate bonds |  |  | 649.6 |  |  | 34.1 |  |  | (0.1) |  |  | 683.6
Municipal bonds |  |  | 1,373.8 |  |  | 37.4 |  |  | (1.6) |  |  | 1,409.6
U.S. government agency and treasury securities |  |  | 565.8 |  |  | 28.5 |  |  | — |  |  | 594.3
Total AFS securities |  |  | 2,657.2 |  |  | 101.7 |  |  | (1.7) |  |  | 2,757.2
Other |  |  | 25.4 |  |  | 2.2 |  |  | (0.4) |  |  | 27.2
Total funds held for clients and corporate investments |  | $ | 3,366.1 |  | $ | 103.9 |  | $ | (2.1) |  | $ | 3,467.9
Included in f unds held for clients' money market securities and other cash equivalents as of November 30, 2020 were bank demand deposit accounts and money market funds. Included in asset-backed securities as of November 30, 2020 were investment-grade securities primarily collateralized by fixed-rate auto loans and credit card receivables and all have credit ratings of AAA. The primary risk associated with these securities is the collection of the underlying receivables. Collateral on these asset-backed securities has performed as expected through November 30, 2020. Included in corporate bonds as of November 30, 2020 were investment-grade securities covering a wide range of issuers, industries, and sectors primarily carrying credit ratings of A or better and having maturities ranging from January 11, 2021 through September 11, 2026. Included in municipal bonds as of November 30, 2020 were general obligation bonds and revenue bonds primarily carrying credit ratings of AA or better and have maturities ranging from December 1, 2020 through November 15, 2027. A substantial portion of our portfolios are invested in high credit quality securities with ratings of AA or higher, and A-1/P-1 ratings on short-term securities. The classification of funds held for clients and corporate investments on the Consolidated Balance Sheets is as follows:
|  | November 30, |  | May 31,
In millions |  | 2020 |  | 2020
Funds held for clients |  | $ | 3,393.1 |  | $ | 3,430.5
Corporate investments |  |  | 174.9 |  |  | 27.2
Long-term corporate investments |  |  | 10.1 |  |  | 10.2
Total funds held for clients and corporate investments |  | $ | 3,578.1 |  | $ | 3,467.9
Funds held for clients’ money market securities and other cash equivalents is collected from clients before due dates for payroll tax administration services and employee payment services and is invested until remitted to the applicable tax or regulatory agencies or client employees. Based upon the Company’s intent and its contractual obligation to clients, these funds are considered restricted until they are remitted to fund these client obligations. The Company’s AFS securities reflected net unrealized gains of $108.9 million and $100.0 million as of November 30, 2020 and May 31, 2020, respectively. Included in net unrealized gains as of November 30, 2020 and May 31, 2020, were 25 and 19 AFS securities in an unrealized loss position, representing approximately 3% and approximately 2% of the total securities held, respectively. AFS securities in an unrealized loss position for which a credit loss has not been recognized were as follows:
|  | November 30, 2020
|  | Securities in an unrealized ‎loss position for less than ‎twelve months |  | Securities in an unrealized ‎loss position for more than ‎twelve months |  | Total
|  | Gross |  |  |  |  | Gross |  |  |  |  | Gross |  |  |
|  | unrealized |  | Fair |  | unrealized |  | Fair |  | unrealized |  | Fair
In millions |  | losses |  | value |  | losses |  | value |  | losses |  | value
Type of issue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | — |  | $ | 1.0 |  | $ | — |  | $ | — |  | $ | — |  | $ | 1.0
Municipal bonds |  |  | (0.5) |  |  | 113.3 |  |  | — |  |  | — |  |  | (0.5) |  |  | 113.3
U.S. government agency and treasury securities |  |  | — |  |  | 12.7 |  |  | — |  |  | — |  |  | — |  |  | 12.7
Total |  | $ | (0.5) |  | $ | 127.0 |  | $ | — |  | $ | — |  | $ | (0.5) |  | $ | 127.0
|  | May 31, 2020
|  | Securities in an unrealized ‎loss position for less than ‎twelve months |  | Securities in an unrealized ‎loss position for more than ‎twelve months |  | Total
|  | Gross |  |  |  |  | Gross |  |  |  |  | Gross |  |  |
|  | unrealized |  | Fair |  | unrealized |  | Fair |  | unrealized |  | Fair
In millions |  | losses |  | value |  | losses |  | value |  | losses |  | value
Type of issue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | (0.1) |  | $ | 6.5 |  | $ | — |  | $ | — |  | $ | (0.1) |  | $ | 6.5
Municipal bonds |  |  | (1.6) |  |  | 60.3 |  |  | — |  |  | — |  |  | (1.6) |  |  | 60.3
Total |  | $ | (1.7) |  | $ | 66.8 |  | $ | — |  | $ | — |  | $ | (1.7) |  | $ | 66.8
The Company regularly reviews its investment portfolios to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns. The Company believes that the investments held as of November 30, 2020 that had gross unrealized losses of $0.5 million were not impaired due to credit risk or other valuation concerns and was not required to record a credit loss or an allowance for credit losses on its AFS securities. The Company believes that it is probable that the principal and interest will be collected in accordance with contractual terms, and that the unrealized losses on these securities were due to changes in interest rates and were not due to increased credit risk or other valuation concerns. Most of the securities in an unrealized loss position as of November 30, 2020 and May 31, 2020 held an AA rating or better. The Company does not intend to sell these investments until the recovery of their amortized cost basis or maturity, and further believes that it is not more-likely-than-not that it will be required to sell these investments prior to that time. The Company’s assessment that an investment is not impaired due to credit risk or other valuation concerns could change in the future due to new developments, including developments related to the COVID-19 pandemic, or changes in the Company’s strategies or assumptions related to any particular investment. ‎ Realized gains and losses on the sales of securities are determined by specific identification of the amortized cost basis of each security. On the Consolidated Statements of Income and Comprehensive Income, realized gains and losses from funds held for clients are included in interest on funds held for clients and realized gains and losses from corporate investments are included in other expense, net. Realized gains and losses from the sale of AFS securities were as follows:
|  | For the three months ended |  | For the six months ended
|  | November 30, |  | November 30,
In millions |  | 2020 |  | 2019 |  | 2020 |  | 2019
Gross realized gains |  | $ | 0.4 |  | $ | 0.9 |  | $ | 0.7 |  | $ | 1.8
Gross realized losses |  |  | — |  |  | — |  |  | — |  |  | —
Net realized gains |  | $ | 0.4 |  | $ | 0.9 |  | $ | 0.7 |  | $ | 1.8
The amortized cost and fair value of AFS securities that had stated maturities as of November 30, 2020 are shown below by contractual maturity. Expected maturities can differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties.
|  | November 30, 2020
|  | Amortized |  | Fair
In millions |  | cost |  | value
Maturity date: |  |  |  |  |  |
Due in one year or less |  | $ | 301.1 |  | $ | 303.7
Due after one year through three years |  |  | 729.3 |  |  | 756.2
Due after three years through five years |  |  | 915.3 |  |  | 963.6
Due after five years |  |  | 1,132.2 |  |  | 1,163.3
Total |  | $ | 3,077.9 |  | $ | 3,186.8
Variable rate demand notes (“VRDNs”) are primarily categorized as due after five years in the table above as the contractual maturities on these securities are typically 20 to 3 0 years. Although these securities are issued as long-term securities, they are priced and traded as short-term instruments because of the liquidity provided through the tender feature.

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