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From point 38 on P.17 the default probability can be implied from market implied CDS spreads. "Macro Surface" method is mentioned, but I cannot get any clue of what it is? Where do I get the acedemic reference for that?

Also what is the commonly used methodology to imply default probability for CVA/DVA calculation?

The article "Credit and Debit Valuation Adjustment" can be seen in http://www.ivsc.org/sites/default/files/IVSC%20CVA%20-DVA%20%20ED_0.pdf

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There are quite a few methods to calculate default probabilities from CDS data. Simply you start at the shortest tenor, assume constant hazard rate. Then for the next tenor, you assume the previous hazard rate is still valid till the previous tenor, and the hazard rate between the previous tenor and new tenor is calibrated so that CDS PV matches the market price.

The Macro Surface method is explained in the document. Actually we use this proxy method but never seen it named as this. Simply you map your illiquid CDS to liquid index CDS that have similar rating, industry, country. In the mapping you can assign some scaling, that is calibrated historically to from the liquid single names to liquid indices. The issue usually is to figure out the liquid single name CDSs. You might need some trader input.

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