How to deal with the high condition number of the noise covariance matrix of gravity field functionals synthesised from a satellite-only global gravity field model?

The posed question arises for instance in regional gravity field modelling using weighted least-squares techniques if the gravity field functionals are synthesised from the spherical harmonic coefficients of a satellite-only global gravity model (GGM), and are used as one of the noisy datasets. The associated noise covariance matrix, appeared...