The Denver Nuggets feel confident in its position to retain restricted free agent Peyton Watson despite growing interest from the Milwaukee Bucks, LA Clippers and Atlanta Hawks. League sources told The Athletic that Denver believes it simply needs to let the restricted free agency process play out.

The Bucks have emerged as a team exploring a potential sign-and-trade for the 23-year-old forward. The Clippers, currently in a holding pattern after their paused Kawhi Leonard trade with the Toronto Raptors, and the Hawks, who recently declined a team option on Jonathan Kuminga, have also expressed interest.

Watson broke out this past season, averaging nearly 15 points per game before a recurring hamstring strain sidelined him in February and ended his season in April. His absence exposed Denver’s lack of athleticism during a first-round playoff loss to the Minnesota Timberwolves.

Watson has become one of the best recent Nuggets draft picks, giving Denver a young wing archetype that is difficult to find across the league.

Any of the three interested teams would likely need to pursue a sign-and-trade given Watson’s restricted free agent status. Denver faces its own financial constraints in any potential re-signing, sitting above the luxury tax threshold and risking the $222 million second apron with an eight-figure contract for Watson.

The Nuggets have already committed significant money to Nikola Jokic, Jamal Murray and Aaron Gordon, along with a five-year, $125 million extension for Christian Braun last summer that has yet to match expectations. Denver also acquired Cam Johnson last summer in a deal sending Michael Porter Jr. to Brooklyn, a trade that has similarly underperformed, and lost Tim Hardaway Jr. to Miami in free agency this offseason.

Despite those financial pressures, sources say none of it will prevent Denver from ultimately re-signing Watson to a substantial deal. Watson is represented by Rich Paul, Calvin Andrews and Lucas Newton of Klutch Sports.