Barcelona are chasing Penarol teen Federico Valverde.

The 16 year-old Uruguayan midfield prospect was watched 'live' by Barca scouts Miki Albert and Pep Boada in Paraguay during the U17 South American Championships.

Chelsea and Arsenal are also in the hunt and Sport says both English giants have tabled 'dizzying' offers to Valverde's family.

Barca are at a disadvantage due to this summer's transfer ban and there is concern they could lose the battle for Valverde's signature to an English rival in the coming months.

Penarol coach Pablo Javier Bengoechea, meanwhile, has stated he believes Valverde is close to a senior debut.

"It is in my head that Federico Valverde will play in the First Division soon," he declared.