It'll be a loan, and City won't authorise any sort of deal to what they perceive to be a direct rival.
If it's in the Premier League, we'd be high on the list of potential clubs to take him, but I think it's more likely to see him move abroad permanently in the summer, or secure a long term loan move to a club in the Midlands for convenience sake, with them picking up 50% of his wages or something.
I wouldn't be surprised if Villa or West Brom went for him.
He's not good enough to improve any club on a permanent transfer who would pay his wage demands IMO. I think it'll be a loan in January at the very least, permanent deal sought in the summer.