The Argentine could play in Athens again next season...
The 22-year-old joined the club in 2007 as a player with a promising reputation, but has since failed to make an impact on the first team.
Work permit restrictions also mean Leto is unliekly to be able to stay at Anfield, and so a transfer is a necessity for both parties.
Leto spent last season on loan in Greece with Olympiakos, but they are yet to table an offer for the Argentinean, who now looks almost certainly bound for the Greens.
"I am very close to Panathinaikos," Leto said, according to Sky Sports.
"There are negotiations between Panathinaikos and Liverpool and as far as I know the two sides are very close to a deal.
"I think that the possibilities to play at Panathinaikos next season right now are more than 90 per cent.
"I have been waiting for something from Olympiakos all these weeks but they didn't make a move to buy me so far.
"It's not a matter of money. I wanted to stay at Olympiakos but since they don't want to sign me I have to think about my future."
Jamie Dunn, Goal.com