The midfielder impressed for City during the early stages of last season before injury disrupted his campaign.
With new boss Mark Hughes now at the helm at Eastlands, it seems that the 20-year-old is set to stay at City and pen an improved deal.
"We have met with the club and made it clear Michael doesn't want to go anywhere else and they declared that they do not want to sell him so the signs are positive all around," a spokesman told the Manchester Evening News.