The 19-year-old was voted both Celtic and the SFA's Young Player of the Year last season as he flourished playing out from the back under Ronny Deila at Parkhead.
The Belgian was not destined to stay with the Bhoys beyond his season-long loan spell with the Scottish champions, however, and returned to Manchester City this summer.
And the Telegraph's report suggests it was a worthwhile move for Denayer, who will now be promoted to City's senior squad, with boss Manuel Pellegrini viewing him as a first-team player.
The ex-Celtic loanee will count as a homegrown talent as the Manchester City man is under the age of 21.
Celtic replaced Denayer with Dedryck Boyata, who went the other way, leaving City on a free this summer.
Should Denayer be given a proper chance by Pellegrini and co this season, then, he could well end up giving the awkward Eliaquim Mangala a run for his money in the centre-back position at the Etihad Stadium. And he will no doubt have plenty to thank Celtic for should he break into the Manchester City side.