Denayer has played 3 times for Belgium (competitive games against Israel and Wales, a friendly against France), and 44 times, in his career, for someone's first team, and that someone was Celtic. Regular appearances, and top performances, against the likes of Kilmarnock, Dundee and Ross County are all well and good, but they're not exactly footballing powerhouses. I think it's possible you're overrating where Denayer is currently with regards to his game.
Even if we don't sign Otamendi Denayer is still likely to play less than 20 times for City this season (with Kompany and Mangala getting the lion's share of starts). There's a strong argument that, with so little first team experience, and at such a lower standard, he'd actually benefit more from a full season as a regular starter in one of Europe's top divisions than he would playing a support role for City.