For the record, I ended up using a script mediator with an inline javascript script in the configuration file using the addHeader method. See below:
<script language="js">
<![CDATA[
var user = mc.getPayloadXML()..*::UserName.toString();
var psswd = mc.getPayloadXML()..*::Password.toString();
mc.addHeader(false, <yta:Authentication xmlns:yta="yta:namespace url"><yta:UserName>{user}</yta:UserName><yta:Password>{psswd}</yta:Password></yta:Authentication>);
]]>
</script>