> Bonds are sold on the secondary market at market value but that is just between private investors right?

Let's say the market value of a government bond on the secondary market is a 4.5% yield. (If it's a bond that pays exactly 4.5% then it will cost 100. If it pays a higher or lower coupon then its market price will be adjusted so that it yields 4.5% when purchased)

If the government goes and offers to sell new bonds on the market at the par price of 100 and is only offering 4% interest, who is going to buy them? If you're an investor, it's much better for you to just buy the existing bonds on the market which give you a 4.5% return. If the government wants to sell new bonds it's going to have to offer a rate that is competitive with the bonds that are currently on the market.