Nicolas Otamendi is close to becoming a Manchester City player

Manchester City are close to reaching an agreement with Valencia for defender Nicolas Otamendi, according to Sky sources.

The Argentina international has a release clause of £35.5m, with Sky sources reporting that the deal is progressing but that contrary to earlier reports, there is no truth that City would allow Eliaquim Mangala to move to the Spanish side on loan as a makeweight.

Otamendi, whose current deal runs until the summer of 2019, is understood to have already agreed personal terms with City and is refusing to train or play for Valencia in a bid to force through a move to the Etihad Stadium.

When asked about the potential deal for the 27-year-old following City’s 3-0 victory over Chelsea on Sunday, manager Manuel Pellegrini said: "I cannot confirm nothing and I don't talk about rumours."

Spanish newspaper, AS, claimed on Sunday night that a £28m deal for Otamendi to join City had been agreed between the clubs, with Mangala moving in the opposite direction on loan.

Mangala, 24, only joined City from Porto last summer and made 25 Premier League appearances during his debut campaign with the club.

The France international played the entirety of City’s victory over Chelsea, a win which lifted them to the top of the early Premier League table.