SACRAMENTO, Calif. (AP) _ The largest privately owned grove of old California redwoods could be saved from logging in a so-called debt-for-nature swap that would trade junk bonds for the trees.

State officials said Tuesday they were negotiating to spare the 3,000-acre Headwaters Forest in Humboldt County, which is owned by Pacific Lumber Co.

Pacific Lumber issued the high-yield bonds - reportedly worth $55 million - to the now-defunct Columbia Savings & Loan of Beverly Hills. The federal government, which seized the thrift in January, now owns the bonds.

John Amodio, environmental policy adviser to Gov. Pete Wilson, said officials hope to work out a state-federal protection plan for the forest.

Under the plan, state officials would acquire the bonds from the federal government and give them to Pacific Lumber in exchange for the forest. By reacquiring the bonds in a swap, Pacific Lumber would be absolved of the debt.

''Certainly, we're trying to make it work because that seems to be what the general public wants to happen,'' said David Galitz, a spokesman for Pacific Lumber.

Headwaters Forest was the site of fierce protests last summer and was the central issue in ballot measures last year that sought to slow logging in California.

Debt-for-nature swaps have occurred in developing nations to settle parts of debts to U.S. banks while preserving threatened land. Mexico signed such an agreement last month.