What financial instrument is used for publicly-funded capital projects?

Governments finance publicly funded capital projects through issuing securities. The Government of Canada uses both bonds and Treasury bills (T-bills) to raise funds for deficits and large infrastructure projects.

T-bills are short-term debt instruments used frequently for government funding.

Commercial paper = corporate borrowing.

Preferred and common shares = equity securities, not typically for public capital projects.

Thus, the correct answer is Treasury bill.