The state of Hawai'i had its credit rating on $4.5 billion of bonds raised to the third-highest rank by Standard & Poor's as the state's tourism-based economy bolstered tax revenue.

S&P Monday raised the state's rating one level to AA from AA-. Fitch Ratings last year upgraded the state's credit rating to AA. Hawai'i is planning to sell about $350 million of general obligation bonds in March or April.

The higher bond rating will save the state money by lowering its borrowing costs.

"Hawai'i is currently in the midst of a sustained, but likely mature, expansionary phase," S&P credit analyst Rob Williams said. "This has contributed to the state's very strong revenue trends, which have significantly improved its financial position."

Hawai'i ended its fiscal year on June 30 with $746 million in reserves, equal to almost 20 percent of its budget. Tax revenue grew 11 percent in 2006, S&P said. Hawai'i's growth in personal income has outpaced the United States over the past three years as the state added jobs not tied to tourism.

The state last borrowed money when it sold $350 million of general obligation bonds to a group of investment banks led by Citigroup Inc.