My understand is as follows:
The bond sold is 100, then gov. only needs to pay 100 back for the bond holder.
The problem is that the gov does not have 100 and it has to sell another bond with 100 to pay for the previous bond holder.
Since the interest rate increases, e.g. 2, the 100 bond only can be sold with 98 now. Thus, the gov. needs another 2 to pay the previous bond holder. This is why the gov does not want to increase the interest rate too fast.
Is that right?