The Swans were heavily linked with a move for the Celta Vigo striker during the summer but ultimately missed out to the Reds.
However, the 26-year-old Spaniard, who recently returned from a thigh injury, has only made seven appearances and has yet to find the net for his new club.
And Michu hopes that may mean Swansea eventually end up getting their man.
"We (Swansea's Spanish players) are hoping he can come here on loan. It would be a pleasure to play with him. Iago has had injuries, but he has quality. He deserves to play in the Premier League," Michu said in quotes reported by the Daily Mirror.
"He has been unlucky. At Liverpool, they have Luis Suarez and (Daniel) Sturridge, who have scored a lot of goals. Suarez is, along with Diego Costa and others, one of the best strikers in Europe."