The goalkeeper has barely featured for the Scottish champions and could bid farewell in January.
The 31-year-old former Belgian international has only made three Scottish Premiership appearances since arriving from OH Leuven at the start of last season, with Brendan Rodgers bringing in his former Swansea City goalkeeper Dorus De Vries to challenge the impressive Craig Gordon in the summer.
Therefore, it is no surprise to see Bailly, whose last international cap came all way back in 2010, depart the green half of Glasgow in the January transfer window and the Daily Record claim that Rodgers is prepared to sanction his exit on loan or in return for a minimal fee.
And the former Borussia Monchengladbach goalkeeper could find himself starting between the sticks in Serie A in the coming weeks, albeit for a Palermo side who have won just two of their 18 league fixtures this season.
Bailly’s exit is unlikely to cause any ripples within the Celtic squad, meanwhile, with the goalkeeper firmly established as the club’s third choice shot-stopper.
A source reportedly told the Scottish Sun earlier in the season that 2015 Belgian title winners Gent were interested in bringing him back to his homeland despite accepting that Bailly had failed to fulfil his potential.
However, Italy now appears to be his most likely destination.