An abbreviation for bilateral credit value adjustment (credit valuation adjustment). It is a type of cross value adjustment/ x-value adjustment (XVA) that takes out the effects of changes in the market value/ valuation of own debt. An example of own debt and its effect on derivatives is the case where bilateral CVA is calculated in relation to a credit default swap (CDS) against the institution’s own debt (e.g., long-term debt, subordinated debt, etc.)

The fluctuation in the CDS spreads dictates, or affects, the changes in the market value of own debt (through income statement/ reported earnings).

Bilateral CVA is typically applied by firms which heavily trade in OTC derivatives and have exposures to counterparty risk.

It is also known as DVA.